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Why Gold and Silver Fell After October's Hot Inflation Data

Gold and silver have had a hard nine days. On Wednesday, October 14, the government's September inflation report came in hotter than forecast, and silver fell about 6% that day. Gold steadied, then held near the low end of its trading range for about a week. On Thursday, October 22, both metals dropped sharply again: Kitco's late-afternoon reading had gold near $4,021 an ounce, down 2.9% on the day, and silver near $54.44, down 5.9%. Why Thursday's drop happened is genuinely disputed, and both explanations are laid out below. (The prices in this post are market readings from the dates given, not offers. How our offers are set is at the end.)

What the inflation reports said

The Consumer Price Index rose 0.6% in September and 3.7% over the past 12 months, the Bureau of Labor Statistics reported on October 14. Economists had expected 3.6% for the annual figure. Most of the heat came from one item: gasoline rose 9.1% in the month, accounting for more than half of the overall increase, and is up 34.2% from a year ago. Prices outside food and energy, which economists call "core" inflation and which the Federal Reserve watches to see whether price increases are spreading through the economy, rose a more modest 0.3% for the month and 2.6% for the year. That annual core figure was a tenth of a point above the 2.5% forecast, and Kitco noted that the monthly headline number itself matched expectations. Bullion dealer APMEX called the consumer report "only marginally hotter than expected."

The bigger surprise came the next morning. The Producer Price Index, which tracks the prices businesses receive for what they sell, often before those costs reach store shelves, jumped 1.3% in September. The Bureau of Labor Statistics said that was the largest monthly rise since March 2022, and the 6.3% rise over 12 months was the largest since December 2022. Economists had forecast a 0.6% monthly rise, according to Kitco.

Why inflation news pushed gold down instead of up

Many people buy gold as protection against inflation, so a falling price on an inflation report can look backwards. The short-term connection runs through interest rates. Hotter inflation makes the Federal Reserve more likely to raise rates, which raises what Treasury bonds and savings pay and tends to strengthen the dollar. Gold pays no interest, so when safe alternatives pay more, holding gold costs more by comparison. Kelvin Wong, a senior market analyst at the trading platform OANDA, said in coverage carried by CNBC on October 22 that expectations of higher interest rates were reducing gold's appeal for exactly that reason. The longer-run argument points the other way: some analysts told Kitco that rising prices could eventually turn into a positive for gold if markets come to believe the Fed cannot get ahead of inflation. Both effects can be true at once, on different timescales.

The odds of an October rate hike jumped, then faded

The Federal Reserve had already raised its benchmark rate on September 16, to a range of 3.75% to 4%. Going into October, traders had been betting against a second hike: a weak September jobs report, which showed only 29,000 jobs added against forecasts of more than 80,000, cut the odds of an October hike to about 17% on October 2, according to CNBC. After the October 14 inflation report, the odds traders placed on another increase at the Fed's October 27–28 meeting roughly doubled, to near 40%, according to APMEX. That is what its headline meant by hot inflation putting "an October hike back in play." The odds did not stay there. By Thursday, October 22, CME's FedWatch tool, which converts futures prices into the probabilities traders are paying for, showed about a 16% chance of an October hike, as reported by CNBC, and Kitco put the odds of no change near 84%. Traders still priced about a 90% chance of a hike at the December meeting.

A rebound, then a week at the bottom of the range

On October 14, gold fell about 1.5%, from roughly $4,190 to near $4,080, according to APMEX. The next day it recovered nearly 1%, even as the producer price report landed, because a global sell-off in technology stocks, tied to worries over spending on artificial intelligence, sent investors toward bonds and precious metals, which are traditionally treated as safe places to park money. Over the following days gold held in the $4,100-to-$4,200 area, which APMEX on October 20 described as the low end of its trading range. APMEX attributed that to rate-hike expectations, the dollar, inflation data and investors' appetite for risk all pulling on gold at once.

Thursday's drop: oil, or the mechanics of a thin market?

On October 22, gold fell through the bottom of that area, and silver posted its second roughly 6% one-day drop in nine days. Two explanations are on offer, and the evidence partly supports each. Kitco, CNBC and Business Today all pointed to oil: renewed attacks on shipping in the Strait of Hormuz and on Saudi energy facilities pushed Brent crude above $113 a barrel during the U.S. session, and higher fuel costs feed the worry about inflation and rates described above. Against that, the usual rate signals did not turn against metals that day. Treasury yields fell, and APMEX reported that futures-implied odds of a December hike slipped; APMEX described the dollar as flat, while Kitco called it "comparatively firm." APMEX wrote that "the usual drivers of precious metals prices offered little explanation." It traced the selling to about 3 p.m. Central time on Wednesday, in the thin last hour of New York trading. APMEX described a chain reaction in which early selling trips automatic stop-loss sell orders, and it said the decline gathered force as markets in Shanghai, Mumbai and then London opened, deepening once the busiest trading hours began rather than reversing. We could not independently check that hour-by-hour timeline. Kitco's own afternoon report, which led with oil, also acknowledged the puzzle: falling yields "failed to support gold, suggesting that precious metals positioning, liquidation pressure and the outlook for further monetary tightening remained dominant considerations."

Silver fell further than gold, as it often does. Its market is much smaller, so the same amount of selling moves its price more, and a large share of silver demand comes from industry, from electronics to solar panels. Kitco cited worries about industrial demand and slowing economic activity as extra pressure on silver Thursday. The technology sell-off also continued Thursday, with the Nasdaq down 2.6%. Unlike on October 15, Kitco wrote, it "failed to generate sustained safe-haven demand for bullion."

Not every signal pointed down

Investors who hold gold through exchange-traded funds, which are shares backed by stored bullion, have mostly stayed put. Analysts at the precious metals refiner Heraeus, quoted by Kitco on October 19, said gold ETF holdings tracked by Bloomberg reached a 2026 high of 101.3 million ounces on October 8 and "have since remained just above 101 moz, even as gold has struggled." Those figures cut both ways. APMEX read the same flat stretch as ETF inflows having "stalled," and Heraeus itself cautioned that ETF holdings "often lag turning points in the price," because investors tend to hold or add on dips until it becomes clear a rally is not coming.

Central banks, which bought gold heavily for most of the past few years, sent a mixed signal of their own. Kazakhstan's central bank, the world's fourth-largest reported central-bank buyer through August by Heraeus's count, plans to trim gold from about 78% of its reserves to 75% by year-end. APMEX called the sale "psychologically bearish" because a major buyer is turning seller, while noting that the amount is small enough for other buyers to absorb easily. Heraeus described it as "primarily a portfolio rebalancing exercise rather than evidence of a broader reversal in central-bank gold demand."

Where prices stand, and what is on the calendar

As of 6:55 a.m. Pacific on Friday, October 23, the live feed on our pricing page showed gold at $4,020.60 an ounce and silver at $53.88. Yahoo Finance reported that gold opened Friday at a three-month low, and oil kept climbing: CNBC had Brent crude above $115 a barrel early Friday, a five-month high. For perspective, gold traded above $5,200 in February, when we covered that rally, and it was hovering around $4,000 in July, when we wrote about central-bank buying and weak retail silver demand. Through Thursday, silver was down about 10% for October, by Business Today's count.

We don't predict where metals go next. These are the scheduled events the market itself is watching:

  • October 27–28: Federal Reserve meeting; the rate decision comes on the 28th.
  • October 29: September figures for the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index.
  • November 10: October Consumer Price Index, from the Bureau of Labor Statistics.

What this means if you're selling in Southern Oregon

Every offer we make is computed from the live spot price at the moment of your appointment. Spot is the current market price for an ounce of metal. On a day like October 14 or October 22, silver moved about 6% in a single session, so an offer on a silver lot can change by a similar share between the day you call and the day you come in, in either direction. Not everything you might bring in tracks spot the same way:

  • Bullion and scrap follow spot most closely. Bullion is priced at live spot minus a small published spread, and scrap on the metal actually in the piece. The percentages are on our How We Price page.
  • Jewelry starts from melt value and then accounts for the maker, the stones, the condition, and whether a piece is worth more intact. See gold jewelry.
  • Collectible coins are priced on date, mint mark, grade and real auction results; the metal is only the floor. See U.S. coins.

This post reports what happened in the markets. It is not a forecast, and it is not advice to buy, sell or wait. If you'd like to know what your pieces are worth at today's spot, both of our locations work by appointment: call Ashland at (541) 482-3715 or Grants Pass at (541) 955-2985, or contact us online.

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