Gold (GCJ26) and silver (SIK26) markets sold off sharply today following a surprisingly hot reading from a key U.S. inflation gauge.
U.S. producer prices rose 0.7% month-over-month in February 2026, above the 0.5% in January and much higher than forecasts for 0.3%. That’s the biggest increase in producer prices in seven months, with goods prices soaring 1.1%, the most since August 2023. The core PPI (minus food and energy) increased 0.5%, after a 0.8% rise in January but above forecasts for up 0.3%.
On an annual basis, headline producer inflation jumped to 3.4%, the highest in a year, compared to 2.9% in January and forecasts it would remain at 2.9%. Core producer inflation also jumped to 3.9%.
Long-time gold and silver market watchers remember when inflation was bullish for the two precious metals, as a physical hedge against rising prices. While gold and silver may still be considered an inflation hedge by many, in recent years, it appears that the prospects of rising inflation choking off economic growth — and in turn consumer and commercial demand for the metals — is trumping the bullishness of them also being an inflation hedge.
And the war in the Middle East is amplifying inflation worries, as crude oil prices (CLJ26) are up sharply from one month ago. Europe and Asia are especially feeling the pinch of higher energy prices. Those regions are also the biggest consumers of gold jewelry.
Traders and investors this afternoon will be looking to Federal Reserve Chair Jerome Powell for insight on how the U.S. central bank is weighing risks to the economy and inflation amid war in the Middle East. Fed officials are expected to keep U.S. interest rates steady and release fresh economic projections that could reveal how they’re interpreting recent economic data and geopolitical events. Powell will hold a press conference early this afternoon, where he will likely emphasize that Fed officials need more time to see how long the U.S. conflict with Iran lasts and to assess how it might impact economic growth and inflation. Traders and investors will be especially interested in Powell’s comments on today’s hot U.S. PPI report.
Other Factors Impacting Gold and Silver Markets
Geopolitics — namely the ongoing Middle East war — continue to be an underlying supportive element for the safe-haven gold and silver markets.
However, gold and silver markets bulls have taken note that what is arguably the biggest geopolitical event in decades could not push the metals’ prices to new highs. They are asking, “If gold and silver prices can’t push to new highs amid the Middle East war that continues to run hot, then what will take them to new highs?”
The U.S. dollar index ($DXY) has posted a solid rally from the late-January low and is hovering near a 10-month high posted last week. The greenback is negative for gold and silver markets on two fronts. One, it’s a competing safe-haven asset during troubled times. Two, a rising greenback suggests rising U.S. Treasury yields. That’s also bearish for gold and silver, which produce no yearly dividends. Rising bond yields during keener uncertainty in the general marketplace tend to attract more investors in Treasuries, which are also considered safe-haven instruments.
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On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
