Gold advocate Peter Schiff has described the metal’s retreat toward $4,145 as a rare buying opportunity, stating that investors have misjudged the latest upturn in US inflation and the Federal Reserve’s prospects for controlling it.
Schiff sees value in gold drop amid inflation surge
On October 17, Schiff commented on X that the week’s unexpectedly strong consumer, producer, and import price data led many to sell gold in anticipation of more aggressive Federal Reserve action.
As inflation readings came in above expectations, investors assumed the Fed would further tighten monetary policy, putting pressure on non-yielding assets like gold.
Gold prices slipped more than 1% on October 14, tracking the release of strong inflation figures and the resulting expectation of additional rate hikes. The price briefly rebounded during Thursday’s session but lost ground again soon after.
By Friday, spot gold was trading around $4,165 per ounce, marking a weekly decline of approximately 0.7%.
Despite this weakness, Schiff described gold at $4,145 as an unusually favorable buying point, contending that persistent inflation would ultimately be more influential for the yellow metal than the immediate possibility of tighter monetary policy.
Schiff argued that investors are overlooking the long-term benefits of holding gold, stating that at $4,145 per ounce, it represented a “gift” to buyers who expect future inflation to raise demand for hard assets.
Schiff’s stance stands in contrast to the broader market, which currently prefers interest-bearing investments as Treasury yields remain elevated.
Inflation data surprises exceed forecasts
The latest economic numbers behind this shift were significant.
The US Bureau of Labor Statistics reported that annual consumer price inflation reached 3.7% in September, beating both the consensus forecast of 3.6% and the previous month’s level of 3.4%.
Producer prices also surprised analysts, climbing 1.3% in September for their largest monthly gain since March 2022. On a yearly basis, the Producer Price Index’s inflation rate stood at 6.3%.
Meanwhile, import prices delivered another upside surprise, with a 1.1% monthly increase versus the expected 0.8%. Over the most recent 12-month period, import prices jumped 8.1%, the fastest annual pace since July 2022.
Mini dictionary: Bureau of Labor Statistics (BLS), a US government agency responsible for collecting and analyzing key economic indicators such as employment, wages, and inflation data, which are widely used by policymakers and investors.
Gold’s outlook tied to inflation and interest rate expectations
Market participants are watching whether persistent inflation or expectations for higher interest rates will have a greater effect on gold’s short-term direction.
Persistent inflation generally supports demand for assets considered stores of value, including gold. However, rising bond yields can draw investors away from gold by providing higher returns elsewhere.
This dynamic has caused bullion prices to weaken even as inflation accelerates, especially during periods of volatile Treasury yields.
A recovery above $4,200 per ounce would help confirm upward momentum for gold. Conversely, if prices stay close to $4,145, traders may again focus on the $4,000 area as a key psychological level.
Morgan Stanley’s outlook has also referenced the $4,000 threshold, with analysts highlighting support from ongoing physical demand and central bank buying.
| Date | Gold price (per oz) | Inflation (CPI YoY) | PPI (YoY) | Import Prices (YoY) |
|---|---|---|---|---|
| Oct 14 | $4,145 | 3.7% | 6.3% | 8.1% |
| Oct 15-16 | $4,165 | – | – | – |
