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Gold and Silver Prices Gain on Cooling US CPI Data
Gold and silver prices were on the rise following the latest CPI data out of the US, with the former approaching US$2,400 and the latter nearing US$30.
!["CPI" written in gold letters with stock charts in background.](https://investingnews.com/media-library/cpi-written-in-gold-letters-with-stock-charts-in-background.jpg?id=51751646&width=1200&height=800&quality=80&coordinates=0%2C0%2C0%2C0)
The US Bureau of Labor Statistics released its latest consumer price index (CPI) figures on Wednesday (May 15), showing that inflation cooled slightly in April, recording a year-over-year increase of 3.4 percent.
That's down from March's 3.5 percent level and slightly closer to the US Federal Reserve's 2 percent target. On a monthly basis, inflation came in at 0.3 percent after stalling at 0.4 percent for the two previous months.
At the start of the year, analysts believed inflation was cooling fast enough for the Fed to start making cuts as early as May; however, stagnating numbers later pushed their expectations to June and eventually to H2.
Market watchers are now looking to September for the American central bank to make its first cut.
At an event in Amsterdam on Tuesday (May 14), Fed Chair Jerome Powell said it's unlikely that more interest rate hikes are in the cards, although the central bank could leave them where they are. “I expect that inflation will move back down … on a monthly basis to levels that were more like the lower readings that we were having last year," he noted.
Powell declined to comment on when rate cuts can be expected.
CPI is a factor the Fed considers when making rate decisions, but other indicators will provide the Federal Open Market Committee with a deeper understanding of the state of the economy ahead of its next meeting on June 11 and 12.
On the back of the CPI release, the gold price rose more than 1 percent in morning trading and inched closer to the US$2,400 per ounce mark, peaking at US$2,389.87 on Wednesday afternoon. The silver price also moved higher, gaining more than 3 percent to reach a high of US$29.72 during that same timeframe.
The S&P 500 (INDEXSP:.INX), Nasdaq Composite (INDEXNASDAQ:.IXIC) and Dow Jones Industrial Average (INDEXDJX:.DJI) all reacted positively to the CPI news, seeing gains in the 1 percent range.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Dean has been writing in one form or another since penning stage plays in his youth. He is a graduate of both Emily Carr University and Simon Fraser University, with a BFA in photography and a BA in communications.
As a writer, Dean has traveled throughout BC and the Pacific Northwest covering cultural events, interviewing small business owners and working alongside fellow writers and photographers from publications like Rolling Stone Magazine, Spin and the Georgia Straight.
Dean has a keen interest in investing, and enjoys learning about the mining industry and better understanding the technical aspects of trading. In his spare time, Dean is an avid home chef, ponders the space-time continuum and makes his own cider. On weekends he can be found cycling the Seawall, exploring farmers markets or sampling the city’s local craft breweries.
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Dean has been writing in one form or another since penning stage plays in his youth. He is a graduate of both Emily Carr University and Simon Fraser University, with a BFA in photography and a BA in communications.
As a writer, Dean has traveled throughout BC and the Pacific Northwest covering cultural events, interviewing small business owners and working alongside fellow writers and photographers from publications like Rolling Stone Magazine, Spin and the Georgia Straight.
Dean has a keen interest in investing, and enjoys learning about the mining industry and better understanding the technical aspects of trading. In his spare time, Dean is an avid home chef, ponders the space-time continuum and makes his own cider. On weekends he can be found cycling the Seawall, exploring farmers markets or sampling the city’s local craft breweries.
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