The price of gold fell this week as U.S. inflation data exceeded expectations, but economist Peter Schiff sees the drop as a buying opportunity. The September Consumer Price Index (CPI) rose 3.7% year-over-year, higher than the forecasted 3.6%. Wholesale inflation also surged, with producer prices up 6.3% annually, the largest increase since 2022. Import prices climbed 1.1% in September, outpacing the 0.8% consensus.
Despite gold's role as an inflation hedge, traders sold the metal, anticipating further Federal Reserve rate hikes, which reduce gold's appeal due to its lack of yield. The gold price dipped about 0.6% this week and has lost over 2% in the past month. Schiff, however, argues that persistent inflation proves the Fed's tightening efforts have failed, making the current gold price a gift for buyers.
Schiff believes gold should have risen this week and that traders are misinterpreting the inflation data. He suggests that if inflation continues to outpace expectations despite higher rates, investors may start doubting the Fed, potentially boosting demand for hard assets like gold. Markets, however, still favor the likelihood of a December rate hike, with a 90% chance priced in, according to Kitco.
Analysts like Hamad Hussain of Capital Economics and Bank of America predict that gold will continue to decline as the Fed raises rates further. Earlier this month, gold and silver lost $400 billion in paper value within minutes, with silver hitting its lowest 2026 close after the CPI release. Schiff's outlook hinges on whether inflation remains stubborn, which could shift investor sentiment toward gold.