Gold Could Hit $4,000, Silver to Outshine as Oil Prices Slide – Peter McGuire

Four years after pandemic-era inflation began surging, American workers’ wages still haven’t fully caught up to price increases. According to Bankrate’s Wage To Inflation Index, the gap stands at -1.2 percentage points, with prices rising 22.7% since early 2021 while wages grew only 21.5%. Though the gap has narrowed from its peak of -4.8 percentage points in 2022, a slowing job market is hampering progress. If current trends continue, workers’ paychecks won’t fully recover their purchasing power until the third quarter of 2026.

The US economy faces mounting challenges as job growth slows dramatically and inflation remains stubbornly above target. July’s employment report showed just 73,000 jobs added, well below expectations, while the unemployment rate ticked up to 4.2%. Despite wage gains, inflation concerns persist with tariff-induced price pressures expected to push inflation toward 3.1% by year-end. The Federal Reserve faces a difficult balancing act between fighting inflation and supporting employment, with economists projecting GDP growth to slow to just 1% in the second half of 2025 as consumer spending weakens and businesses pull back on hiring.

The Trump administration has expanded its 50% steel and aluminum tariffs to include 407 additional product categories, effective Monday. The new tariffs now cover everyday items containing steel or aluminum, including auto parts, fire extinguishers, machinery, construction materials, plastics, and specialty chemicals. Experts estimate these tariffs now affect at least $320 billion of imports, up from $190 billion, potentially adding more inflationary pressure to rising prices.

President Trump’s demands for the Federal Reserve to cut interest rates by three percentage points have raised investor concerns about “fiscal dominance”—a scenario where keeping government borrowing costs low takes priority over fighting inflation. With a recent budget bill adding trillions to US debt and Trump arguing rate cuts could save $1 trillion annually in interest costs, markets fear a return to an era of politically influenced monetary policy. The dollar has already fallen 10% this year while Treasury yields remain elevated, signaling investor worries about inflation risks. Historical precedents from Germany’s 1920s hyperinflation and Argentina’s economic crises serve as

Gold prices are holding steady around $3,320-$3,350 per ounce as investors await two key developments: US-led diplomatic efforts to end the Ukraine war and the Federal Reserve’s Jackson Hole symposium starting Friday. Fed Chair Jerome Powell’s keynote speech is expected to provide hints about potential interest rate cuts in September, with markets pricing in an 83% probability of a 25-basis-point reduction. Lower rates typically benefit gold as a non-yielding asset.