Gold and silver end the week lower as oil and inflation worries weigh

what happened

Gold futures held their ground in choppy trading after a softer-than-expected U.S. producer price reading and steadier oil prices eased inflation fears that had knocked precious metals down the prior session, Market Talk reported. Silver slid to a fresh 52-week low.

Phil Flynn of Price Futures Group said in a note that the market is judging the Middle East conflict mainly through oil. In his view, pricier crude lifts inflation, which pushes the Fed toward tighter policy, and that hurts a metal that pays no interest. He described gold as an attempt to recover from the previous session's sharp drop.

Front-month gold settled up $1.30 in New York at $3,879.70 an ounce, still a 4.5% decline for the week. Silver fell 1.9% to $49.031 an ounce, its weakest close in a year, and is down 5.4% for the week.

why it matters

Gold pays no interest, so rising real yields and expectations of tighter Fed policy typically weigh on it. The link to oil makes metals sensitive to energy prices, since costlier crude strengthens inflation concerns. This week silver dropped more sharply than gold.

market impact

Gold and silver: inflation worries and a tougher Fed outlook pressure the metals

• ▼Gold pressure down — expectations of tighter Fed policy from pricier oil weigh on a non-yielding metal
• ▼Silver pressure down — fell more than gold over the week and hit a one-year low

tags

instruments