Prices for gold and silver are sliding lower as the U.S. dollar and oil prices move higher.
Crude prices and the greenback are rising as hopes fade for an end to the U.S.-Iran war, and as new inflation data puts a damper on the prospect of interest rate cuts anytime soon.
Spot gold is down 0.8% to $4,698.22 U.S. per ounce early on May 12. At the same time, silver’s price is down 0.84% and trading at $85.18 U.S. an ounce.
The weakening of precious metals comes after U.S. President Donald Trump said a ceasefire with Iran is “on life support.”
Also putting pressure on gold and silver are energy prices, with Brent crude oil, the international standard, trading at $107.59 U.S. a barrel.
And the latest inflation data out of the U.S. showed that consumer prices rose a greater-than-expected 3.8% in April, the highest reading in a year due largely to soaring gas prices.
The spike in inflation has ‌increased the likelihood of higher interest rates for longer, which is bad news for gold and silver.
While gold and silver are seen as a hedge against inflation, high rates tend to weigh on the non-yielding assets.
The situation also has the U.S. dollar marching higher and at a one-week high compared to a basket of international currencies.
Analysts say the prices of gold and silver are likely to continue to struggle as long as inflation remains high and interest rates do not move lower.
