A stronger dollar wasn't keeping gold and silver prices down, although it was tempering their rallies, as the metals gained on U.S. inflation worries. Consumer prices rose 3.6% in May year-over-year and core prices, which excludes energy and food, rose 1.5% year-over-year. Both numbers were hotter than expected. To top off the bad news in the U.S., stocks were getting hammered after Tuesday's rally and as manufacturing activity in the New York region slowed in June. Industrial production for May also grew less than expected.
Rhind thinks that most participants in the gold market are actually buying as a hedge against inflation. Rhind says if an investor is looking at official numbers, they might be less than impressed, but "rising food prices, rising health care costs, rising energy prices, so therefore the net effect for the consumer is actually one of real rising inflation."