Gold falls off recent highs on reports that the International Energy Agency was coordinating a global release of oil reserves to temper the supply shock from the Iran war’s closure of the Strait of Hormuz, which has spurred energy prices this week and roiled markets worldwide. The yellow metal also getting pressure from this morning’s inflation data.
Inflation sticking above the Federal Reserve’s target in February. The consumer price index rose 2.4% in February from a year earlier according to this morning’s report from the Bureau of Labor Statistics. That’s unchanged from 2.4% in January and was in line with analysts’ expectations. The Fed aims for a long-term inflation rate of 2%. The reference period for the consumer price index predates the Iran war, so the data does not include inflationary conditions before the conflict and subsequent oil price surge.
In the first part of the week, gold attracted haven investors, triggering a rally, but prices retreated as news of the potential shot of oil supply to the markets soothed concerned traders. Commodity prices remained volatile.
April gold futures rose 2.7% Tuesday to settle at $5,242.10 an ounce on Comex and are up 1.6% so far this week. Bullion surged 11% in February after climbing 9.3% in January and rising 2% in December. It rallied 64% last year. The April contract is currently down $64.0 (-1.22%) an ounce to $5178.10 and the DG spot price is $5187.70.
Gold initially rallied on the news that the IEA was proposing the highest ever coordinated oil release from strategic reserves, topping the 182 million barrels after Russia’s full-scale invasion of Ukraine in 2022.
While investors are closely watching the impact of the conflict in the Middle East, they are also increasingly turning their attention to key inflation indicators due out this week. In addition to the CPI for February, the delayed personal consumption expenditures price index – the Federal Reserve’s favorite inflation gauge – is set for release Friday with January data.
The end of the week will also bring January data on fourth-quarter GDP and January personal spending as well as March preliminary consumer sentiment.
Even before the Iran war drove oil prices higher, many market watchers were concerned about economic weakness, particularly that inflation was edging up that might keep the Fed from implementing interest rate cuts this year – or at least very many of them. High interest rates are considered bearish for precious metals because they make them less attractive investments in comparison to other assets.
The Fed is set to meet on monetary policy late this month and policymakers will be looking at inflation and the labor market for cues.
Almost all of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep interest rates unchanged again this month, with the rest anticipating a 25 basis point cut. The central bank kept interest rates unchanged in January after three previous rate cuts. The Fed reduced interest rates for a third consecutive time in December to 3.50% to 3.75%. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts in 2024.
Currently, investors don’t expect the Fed to cut rates until the second half of the year, the CME tool shows.
Front-month silver rallied 6% Tuesday to settle at $89.59 an ounce on Comex, and the May contract gained 6.3% in the first two days of the week. It touched a record above $115 in January. Silver gained 19% last month after advancing 11% in January and climbing 24% in December. It rose 141% last year. The May contract is currently down $4.232 (-4.72%) an ounce to $85.360 and the DG spot price is $85.46.
Spot palladium increased 0.5% Tuesday to $1,695.00 an ounce and added 1.7% so far this week. Palladium gained 8.8% in February after advancing 2.4% in January and increasing 11% in December. Palladium gained 74% last year. Currently, the DG spot price is down $35.90 an ounce to $1659.50.
Spot platinum rose 3.2% Tuesday to $2,243.50 an ounce and gained 4.4% in the first two days of the week. It advanced 15% last month after gaining 1.4% in January and surging 22% in December. Platinum increased 122% in 2025. The DG spot price is currently down $28.60 an ounce to $2210.70.
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