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Metals Stocks: Gold, silver retreat after August inflation surprise

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Gold and silver prices tumbled Tuesday morning, reversing earlier gains, as U.S. inflation for August came in surprisingly strong, causing the dollar to rise and short-term Treasury yields to reach fresh 14-year highs.

Price action

Gold futures
GCZ22,
-1.40%

for December delivery fell $19.50, or 1.1%, to $1,721 per ounce on Comex.

Silver futures
SIU22,
-0.99%

for December delivery shed 27 cents, or 1.4%, to $19.59 per ounce.

What analysts say

Precious-metals analysts blamed the U.S. August consumer price index data for the sudden retreat in prices.

“Gold and silver prices are solidly lower in early U.S. trading Tuesday following a surprisingly hotter-than-expected inflation report that reinforces notions the Federal Reserve will keep its aggressive monetary policy tightening stance,” said Jim Wyckoff, senior analyst at Kitco.

U.S. CPI inflation rose by 0.1% in August, against expectations for a 0.1% drop in a Wall Street Journal poll of economists. What’s worse,  the so-called core rate of inflation, which omits food and energy, rose by a sharp 0.6%, higher than the 0.3% rise economists’ who participated in the WSJ survey had expected.

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