Middle East Conflict Boosts Inflation Expectations, Fed's "Higher for Longer" Outlook, Gold Price Could See Weekly Decline

BlockBeats News, May 15th. In the United States, April inflation data continued to heat up, triggering market concerns about the Fed's "higher for longer" interest rate policy. The dollar and U.S. bond yields strengthened simultaneously, and the international gold price came under pressure this week. Spot gold fell by over 2% to around $4560 on Friday, while silver dropped by over 6% to around $78.

Data shows that the U.S. April PPI growth rate reached the fastest pace since 2022, while the CPI registered its largest increase since 2023. After the market worried that the Middle East war would further intensify U.S. inflation pressure by boosting energy prices, it weakened rate cut expectations.

Due to the continued impact of the crisis in the Strait of Hormuz, WTI crude oil briefly rose above $103 this week. ANZ analysts stated that the warming inflation expectations, rising yields, and a stronger dollar may continue to suppress gold's performance, delaying the expected time for gold to rise to $6000 per ounce to mid-2027.

KCM Trade analyst Tim Waterer stated that gold is currently facing a "triple threat," as the rise in oil prices has reignited inflation concerns, driving yields and the dollar higher, making gold the "victim" of market reevaluation of the rate cut prospects.

Despite gold falling by over 12% since the outbreak of the war, some institutions remain optimistic about the future. JPMorgan Chase believes that hedge funds and CTA strategy funds may continue to increase their long positions in gold over the next few days.

As for silver, despite a sharp 6% decline on Friday, driven by speculative demand for industrial metals, the silver price has still risen by about 6% since May. Analysts believe that supply-demand gaps and structural demand will continue to support silver prices in the medium to long term.