Gold prices moved lower Wednesday after new U.S. inflation data strengthened expectations that the Federal Reservecould keep interest rates elevated for a longer period, pressuring precious metals markets.

Bullion dropped as much as 1% after fresh economic figures showed wholesale inflation in the United States accelerated sharply in April, reaching its fastest annual pace since 2022. Analysts said rising transportation and freight costs tied to ongoing instability in the Middle East contributed heavily to the increase in producer prices.

The latest Producer Price Index report showed prices rising 6% year-over-year, exceeding economist forecasts. Core inflation, which excludes food and energy, climbed 5.2% compared with the same period last year — marking the strongest increase in more than three years.

The hotter-than-expected inflation numbers pushed U.S. Treasury yields higher, with the benchmark 10-year yield approaching levels not seen since last summer. Investors also increased bets that the Federal Reserve may maintain a more aggressive stance on monetary policy rather than cutting rates anytime soon.

Higher interest rates tend to weigh on gold because the metal does not generate yield or interest income, making fixed-income assets more attractive when rates rise.

After experiencing volatility during the early stages of the Iran conflict, gold has recently traded within a narrower range as investors weigh competing economic risks. On one hand, persistent inflation could force central banks to maintain tighter policy. On the other, slowing global growth and geopolitical instability may eventually support safe-haven demand for gold.

Meanwhile, India — the world’s second-largest consumer of gold — unexpectedly raised import tariffs on gold and silver to roughly 15%, up from 6%. Analysts believe the move is aimed at protecting India’s currency and strengthening foreign exchange reserves amid global economic uncertainty.

While gold struggled, silver continued its strong rally. Silver prices climbed to their highest level in more than two months and remained on track for a seventh consecutive daily gain — the metal’s longest winning streak since December.

Market analysts pointed to renewed buying activity from Chinese investors as a key factor supporting silver prices. According to commodity strategists, prices in China have remained consistently above overseas markets, at times making silver imports into the country profitable and signaling strong physical demand.

By late morning trading in New York, spot gold was down 0.6% at approximately $4,688 an ounce, while silver gained more than 2% to trade above $88 an ounce. Platinum and palladium also posted gains, while the U.S. dollar edged slightly