U.S. inflation data surges above expectations, gold and silver prices plunge

FX168 Financial News March 19—— During the US session on Wednesday (March 18), spot gold once fell to $4,874.19 per ounce, hitting a six-week low; April gold futures plummeted by $129.00 to close at $4,879.20 per ounce, down about 2.6%. Silver also slumped, with May futures falling $2.786 to $77.08 per ounce, a four-week low.

During the US session on Wednesday (March 18), spot gold once fell to $4,874.19 per ounce, hitting a six-week low; April gold futures plunged $129.00 intraday to $4,879.20 per ounce, down about 2.6%. Silver slumped in tandem, with May futures dropping $2.786 intraday to $77.08 per ounce, a four-week low.

The February Producer Price Index (PPI) released by the US Department of Labor showed a month-on-month increase of 0.7% (far above the expected 0.3% and previous value of 0.5%), the largest increase in seven months. Among these, goods prices rose 1.1% MoM, the highest since August 2023. Core PPI (excluding food and energy) rose by 0.5% MoM (expected 0.3%). Annual headline PPI rose to 3.4% (expected 2.9%, previous 2.9%), and annual core PPI rose to 3.9%. This data directly shattered the market's optimistic expectations of a rapid rate cut by the Federal Reserve this year, with evident pressure from resurgent inflation.


The Iran conflict has persisted for nearly three weeks with no sign of de-escalation. Iran's giant South Pars gas field was attacked, marking the first assault on Gulf energy infrastructure during the war. Tehran subsequently warned neighboring countries’ energy facilities face threats. Brent crude oil futures remain above $100 per barrel, while NYMEX crude nears $99. Elevated energy costs are significantly pushing up inflation expectations.

David Meger, director of metals trading at High Ridge Futures, said: “As the war continues to escalate, rising energy prices exacerbate inflation—one reason why the Federal Reserve may be unable to cut rates, which also puts pressure on gold prices.”



The US Dollar Index edged up slightly, and the yield on US 10-year Treasuries rose to about 4.2%. In a high-interest-rate environment, the non-yielding gold becomes more costly to hold. While the Middle East war drives some safe-haven demand,

Meger noted: “I don't think there is a lack of safe-haven demand, it's just that other pressures are temporarily overwhelming this demand.” A strong dollar makes it more expensive for holders of other currencies to buy gold, further exacerbating gold’s downside.



The Federal Reserve is expected to keep rates unchanged at the end of today’s meeting and release the latest economic forecasts and dot plot. Powell will then hold a press conference, with the market most concerned about his comments on today’s far-above-expected PPI data and his assessment of the Trump administration’s “endless conflict” in the Middle East and its implications for economic growth, inflation, and monetary policy outlook. If Powell emphasizes “needing more time to observe the persistence of the conflict” and “inflation risks skewed to the upside,” gold’s short-term selling pressure will intensify; conversely, if he suggests the conflict's impact on inflation is controllable or that there is room for rate cuts in 2026, a rebound could be triggered.



Gold has fallen below the key support level of $4,950–$4,900, with the next major support at $4,800–$4,750. Silver’s decline is even sharper; after losing the $77 mark, it may test the $73–$74 region. Despite evident short-term adjustments, the ongoing Middle East conflict and persistently high oil prices are likely to continue, and the dual long-term boosts from rising inflation and geopolitical risks have not reversed. Gold’s historical role as a classic inflation hedge remains robust, and this round of correction may even present an opportunity to buy on dips.