Precious metals prices dropped slightly amid recent news indicating that geopolitical tensions have begun to ease.
The deepest percentage in price decline was observed in palladium, which lost 4.18%, or $98. The strong decline in palladium is directly related to the potential de-escalation of the geopolitical conflict.
All precious metals are trading down today. Silver plunged by almost 2% (-1.8%):]
Gold also noticeably fell by $14.30 (-0.76%):
The biggest factor that can cause bullish sentiment in gold prices is the current level of inflationary pressure. The recent CPI (consumer price index) reached its highest level since February 1982 at 7.5%. Nevertheless, the most alarming news indicating that inflationary pressure in the US will spiral was yesterday's PPI index (producer price index). The producer price index is an excellent barometer of the wholesale costs of companies and corporations producing goods and services. Moreover, the PPI index provides extended information about the CPI and PCE indices. The increase in wholesale costs will later be shifted to consumers.
Yesterday, the US Bureau of Labor Statistics released the PPI index, indicating that wholesale prices rose 1% in January. Thus, the annual wholesale price inflation index is 9.7%, which is almost a record high since the first calculation of the PPI in November 2010. It was 9.6% in November 2021.
Inflation will continue to rise, not fall, as the Fed has long predicted. The inflation growth was a multi-year event that was the net result of extremely aggressive growth in the money supply due to administrative programs and the Fed's aggressive monetary policy on their asset balance, which currently exceeds $8.7 trillion.
To effectively reduce inflation, two things must happen. First, it is necessary to reduce the balance of assets and the money supply in the United States, combined with an increase in interest rates. Second, and most importantly, supply chain problems should be effectively eliminated. As long as inflationary pressures continue to rise, gold's price will most likely continue to rise.