Editor's Picks: Gold, Silver Shrug Off Hot Inflation Data, Prices Bounce Back
With an eye for detail and over a decade of experience covering the mining and metals sector, Charlotte is passionate about bringing investors accurate and insightful information that can help them make informed decisions.
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Gold and silver prices recovered quickly after US consumer and producer price index data came in hotter than anticipated.
The gold price dropped and then bounced back this week, sinking to around US$4,080 per ounce midway through the period before recovering.
Silver put on a similar performance, sinking below US$56 per ounce.
We'll get into what caused those declines in a moment, but before we do, I want to flag that silver price level. I heard this week from Dr. Mark Thornton of the Mises Institute, who said that from a technical standpoint the white metal could be forming a double bottom.
"If you look at it at US$55, it could be the beginning of a double bottom in the price of silver, because we had silver at US$55 back in July, and then we got a recovery up to about the US$70 level and now it's come all the way back down to US$55.
"So it's potentially a double bottom, which the technicians tell me is a very powerful formation of the chart pointing in the direction of much higher silver prices. Maybe silver is also just, you know, following the elusive nature of these technical charts, but it certainly looks like that's where it is today."
Steve Barton of In It To Win It made a similar comment when we spoke last week, identifying US$54 as a key silver price level to watch. Here's what he said:
"After US$58, then we're going to have the long-term trend line that we've drawn ad nauseam on this show, and that is basically hitting around US$54, connecting the high from 1980, the high from 2011 and then this little double top right here. And if we just string that out, that's going to be around US$54 right there.
"I think that's a pretty heavy line in the sand. (But) if I'm wrong, and gold actually breaks that previous low of US$3,950, then I don't think that this US$54 level here holds. If I'm right, and it does hit the US$4,000, US$3,950 level and bounces, then I think worst-case scenario here on silver, we basically do that."
Going back to what caused this week's precious metals price declines, the key culprit was the latest US consumer price index (CPI) data, which came in hotter than anticipated.
CPI rose 0.6 percent on a monthly basis in September and 3.7 percent year-on-year, above analysts' expectations of 3.6 percent. Core CPI, which excludes the food and energy categories, increased 0.3 percent from the previous month and 2.6 percent from a year ago.
Market watchers are pointing to energy prices, which continue to be impacted by the Iran war, as a key driver of September's inflation numbers, although that's not the only area that saw acceleration — vehicle, apparel and shelter costs were an issue too.
US producer price index (PPI) data came through this week as well, and also surpassed forecasts, rising 6.3 percent annually and 1.3 percent month-on-month.
Those are the biggest gains since December and March 2022, respectively.
Together, the reports have boosted expectations for another US Federal Reserve interest rate hike in 2026 — most likely at the central bank's December meeting.
Bullet briefing — Oil prices rise, uranium's strong setup
Oil prices break US$105
As inflation concerns continue to mount, Brent crude traded above US$105 per barrel again this week, spurred higher by increasing tensions in the Middle East.
The situation remains complex, but recent developments include reports that Iran has attacked ships in the Strait of Hormuz, as well as a clash between the Houthis and Saudi Arabia.
While President Donald Trump has said the US will not restart strikes against Iran before midterm elections, concerns about a prolonged conflict are growing.
Uranium buying opportunity?
On the energy side, I also want to briefly mention uranium.
I spoke this week with Justin Huhn of Uranium Insider, and he reiterated an idea that I've been hearing over the past couple of months, saying now could be a good entry point.
Here's how he explained it:
"We built a decent cash position in both of our portfolios between December and let's say March, April, and we started to deploy that cash in June very slowly. We deployed significantly more in July and early August, and then we've been continuing to add in September and even as soon as last week. And we're actually considering adding adding a bit more with our remaining cash position today (October 14) or perhaps tomorrow (October 15). So a lot of signals are lining right now that lead me to believe that if the bottom isn't perfectly in right now, we are very, very close."
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
