Gold Holds Near $4,700 Amid U.S. Inflation Pressures

SadaNews - Gold held steady after a decline, as rising inflation in the United States bolstered bets that the Federal Reserve will keep interest rates higher for a longer period.

The precious metal was trading near $4,697 per ounce after a 0.6% drop on Wednesday following data showing that wholesale price inflation in the United States accelerated in April to its fastest pace since 2022. Yields on 10-year Treasury notes rose towards their highest levels since July, which is a negative factor for gold as it does not yield interest.

The U.S. Senate confirmed on Wednesday, by a narrow margin, Kevin Warsh's appointment as Chair of the Federal Reserve, amid looming concerns over whether he will maintain the central bank’s tradition of making interest rate decisions free from political pressures.

Questions about the independence of the Federal Reserve were one of the main factors that drove gold to record levels in January.

U.S. Inflation Pressures Gold

The rising Consumer Price Index added to the pressures, with a 3.8% increase from the previous year, marking the largest rise since 2023, according to data released on Tuesday. Gas prices have surged about 50% since the onset of the war, according to the "American Automobile Association," while the latest report from the Bureau of Labor Statistics indicated rising prices for airline tickets, housing, clothing, and food.

Gold has traded within a narrow range since its sharp drop in the early days of the Iran war, as investors balance concerns over inflation that could keep interest rates high against growth fears that might push for easing amid ongoing conflict. Meanwhile, silver rose 19% in May.

Silver Benefits from Technical Momentum

Nikki Shiels, Head of Research and Metal Strategy at trading company "MKS PAMP SA," noted in a memo that the gains are largely due to a technical breakout and speculation.

She added that the recent rise in copper and supply concerns helped drive silver's leap, which is a by-product of copper mining. She stated that silver, zinc, and copper are showing strong trend signals, "with increased accumulation happening automatically without the need for fresh momentum."

Silver Price

Silver prices also approached $86 per ounce.