This Week’s Inflation Report Could Change Everything For Gold and Silver

Renewed tensions in Ukraine, a weaker U.S. dollar, and a faltering domestic stock market combined to support precious metals prices last week as most risk assets declined. Dollar weakness appears to be the biggest short-term driver for gold while steady demand in China and India continues to be one of the most important long-term factors and recent news from Asia has been encouraging during what is a seasonally weak time of the year.

While some gold market analysts are again bullish after recent gains, big investment banks are still mostly bearish, while U.S. investors remain largely uninterested in precious metals, neither buying nor selling. That could soon change, however, as surging U.S. import/export and wholesale prices have suddenly rekindled inflation concerns with more data available this week when the Labor Department releases the March consumer price index.

The technical picture for precious metals has seen a major improvement in recent weeks but, according to this Bloomberg report, big investment banks such as Goldman Sachs and Morgan Stanley remain very bearish. Better looking charts were a key reason why respondents to Kitco’s weekly gold survey were surprisingly positive with nearly two-thirds of those surveyed seeing higher prices in the week ahead as shown below.

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