Silver and Gold Sink as US Inflation Shock Crushes Fed Rate-Cut Bets

SILVER and GOLD sank on Wednesday, spiking beneath 1-month lows as new US data said inflation had already jumped before the USA and Israel began this month's war with Iran, crushing expectations that the Federal Reserve will cut interest rates any time this year.

With global crude oil prices surging above $100 per barrel, betting on Fed Funds futures jumped to put worse-than-evens odds on the US central bank cutting Dollar interest rates before December, with the chance of 'no change' at the Fed's final meeting of 2026 jumping to 40%.

That's 10 times the possibility projected by the futures market at the end of last month.

Back then, on the eve of the US-Israeli war on Iran, the consensus bet for when the Fed would next cut interest rates was June, according to derivatives exchange the CME's FedWatch tool.

Already back below $5000 per Troy ounce as Asian trading ended today, the spot price of gold in London then plunged 3.2% to touch 6-week lows at $4837 after February's US producer price inflation came in way above analyst forecasts.

More industrially-useful silver also sank, dumping 5.3% from $80 per ounce − and also hitting its lowest in a month beneath $76 − after the Bureau of Labor Statistics put core PPI inflation at 3.9% per annum, matching the ugliest pace of price rises in 3 years when volatile fuel and food items are excluded.

Government bond prices dropped with Western stock markets as base metal copper sank to its lowest price since New Year's Eve.

Sinking by $130 per ounce from yesterday afternoon, the price of gold made its first swing of $100 or more since Tuesday last week, when President Trump appeared to 'TACO' on the Iranian war, denting oil prices and boosting global stock markets.

Gold has now made 18 daily swings of $100 or more per ounce so far in 2026. That's more than all previous years in history combined.

Western stock markets meantime reversed earlier gains on Wednesday as stagflation fears rose again following the US inflation surprise, snapping what had been the 3rd daily gain in a row for the MSCI World Index.

Global crude oil benchmark Brent jumped to fresh 3.5-year highs abover $108 while US benchmark WTI jumped within $1.50 of $100 per barrel.

US crude oil stockpiles rose unexpectedly last week on the American Petroleum Institute's latest data, but products refined and ready for use dropped hard, with inventories of motor gasoline falling the most since late-October.