Gold & Silver Bounce from Oil-Led Drop; US Consumer Prices Jump at Quarter-Century Record Pace

From Chris Mullen at GoldSeek.com...

Gold and silver rose roughly 0.5% by about 09:00 in New York on Wednesday before they fell as low as $957.50 and $18.60 respectively just a little after 11am.

Both metals then rallied back higher into the close and ended with losses of 1.6% and 1.13%.

The Gold Price in Euros fell to about €607, platinum lost $50 to $1924.50, and copper fell nearly 5 cents to about $3.67.

Gold and silver equities fell over 3% by late morning before they rebounded a bit, but they still ended with over 2% losses.

On the data front, US consumer price inflation for June showed the highest monthly jump since 1982. While Net Foreign Purchases of US securities fell to just $67 billion in May, net overall US capital flows dropped from an inflow of $61.6 billion in April to a surprising outflow of $2.5 billion in May.

Oil added further to Tuesday's sharp losses after US stockpile inventories built more than expected across the board. Demand was reported to be 2% below last year’s level.

Crude inventories built 3.0 million barrels, gasoline inventories built 2.4 million barrels, distillate inventories built 3.2 million barrels, and refinery utilization rose 0.3% to 89.5%.

The US Dollar index rose and Treasury bond prices fell as open-market interest rates rose on the higher than expected CPI number.

The Dow, Nasdaq, and S&P also rose throughout most of trade and ended over 2% higher as oil fell markedly for the second day in a row and Wells Fargo came out with a better than expected earnings report and raised hopes about the health of the financial companies.

Newly released Federal Reserve minutes from their June 25th meeting – in which they held interest rates at 2.0% – meantime showed that members were increasingly worried about both a slowing economy and rising inflation. The battle over what do with interest rates intensified as a result, but with financial instability rising sharply in the three weeks since that meeting the market is no longer expecting any kind of interest rate hike anytime soon.

Previously, interest-rate futures expected an eventual increase of 50 basis points at the further end of the curve.

Thursday at 13:30 GMT brings Initial Jobless Claims for last week, expected at 380,000, plus Building Permits for June and Housing Starts, expected at 960,000.

At 15:00 GMT comes the Philadelphia Fed survey for July, expected at -15.0.

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