Gold retreated Wednesday after a surprise jump in US wholesale inflation reinforced expectations that the Federal Reserve will keep interest rates higher for longer, while silver climbed as demand from China and changes to Indian import policy reshaped flows in global precious-metals markets.
The US producer price index for April rose 6% year‑on‑year, the fastest pace since 2022 and above all estimates in a Bloomberg survey of economists, with the monthly increase the sharpest since 2022. A core PPI measure that excludes food and energy advanced 5.2% from April 2025, the biggest gain in more than three years. Those readings pushed Treasury 10‑year yields toward the highest levels since July and nudged the Bloomberg Dollar Spot Index up about 0.1%, a combination that is typically bearish for non‑yielding bullion.
Spot gold fell as much as 1% on the data and was trading about 0.6% lower at $4,688.16 an ounce by 11:30 a.m. in New York, as investors priced in a longer period of restrictive policy from the Fed. Gold has been volatile since the outbreak of the Israel‑Iran-related fighting earlier this month — dropping sharply at first, then settling into a narrow trading band as market participants weigh the inflationary effects of higher energy and freight costs against the growth drag from prolonged conflict.
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Silver diverged, rising 2.1% to $88.24 and marking roughly a 19% gain for the month of May so far. TD Securities’ senior commodity strategist Ryan McKay said top traders on the Shanghai Futures Exchange have been steady buyers of silver over the past month, noting that Chinese domestic prices have stayed above international levels. At times in recent weeks, that spread made it profitable to import silver into China, supporting sustained buying beyond typical fund flows.
Complicating the picture for precious metals, India — the world’s second‑largest consumer of gold — abruptly raised import duties on both gold and silver to about 15% from 6% in a surprise move aimed at defending the rupee and shoring up foreign‑exchange reserves. The tariff increase is likely to tamp down some physical import demand into India, but it also risks redirecting flows and creating short‑term volatility in global prices as traders and buyers adjust.
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Market participants said the tug‑of‑war between persistent inflation, which bolsters expectations for higher interest rates, and geopolitical uncertainty, which can push investors toward safe havens, will continue to dictate near‑term price action. Analysts will be watching forthcoming US inflation releases and Fed commentary closely for signals on the policy path, while physical demand from China and policy shifts in large consumer markets such as India add further, sometimes opposing, pressures on bullion and silver.
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