Silver Plunges and Gold Drops as Hotter Inflation Lifts the Dollar

On Wednesday, October 14, precious metals faced heavy pressure after the Consumer Price Index rose 0.6% in September and 3.7% year over year, lifted by a 9.1% increase in gasoline costs. Accelerating inflation revived expectations of a higher path for Federal Reserve interest rates, pushing spot silver down 6.6% to $55.53.

Gold followed silver lower. As government bond yields climbed following the inflation data, December gold settled at $4,107.90 as rising interest rate bets weighed on demand.

Crude oil moved higher instead. Oil gained as attacks in Saudi Arabia and new threats targeting tankers raised supply concerns, with West Texas Intermediate settling at $95.09 and Brent crude finishing at $106.06.

Major currencies responded to the shifting rate outlook. The yen initially weakened against the dollar as stronger inflation revived rate-hike expectations, but strengthened against the dollar later in the day as the greenback cooled, leaving the dollar at 158.16 yen. Across global foreign exchange, the dollar index strengthened 0.37% over the session.

Round-the-clock trading extended those moves into the following morning. By 10:20 am New York, benchmark trading showed silver -5.6% and the yen against the dollar +0.3%.

Cryptocurrency trading remained subdued throughout the day, with Bitcoin +0.3% and Ethereum +0.6%.

Scheduled economic releases on Thursday will offer additional insight into price pressures and consumer activity. The September Producer Price Index is scheduled for release at 8:30 a.m. Eastern. Advance retail sales figures for September are also scheduled for Thursday morning, alongside weekly initial jobless claims, business inventories, and regional manufacturing surveys on the economic calendar. In Japan, August machinery orders are scheduled for release.