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(Bloomberg) -- Gold fell as the latest US data showed a resurgence in inflation, reinforcing bets that the Federal Reserve will keep interest rates higher for an extended period of time.

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Bullion dropped as much as 1% Wednesday after data showed US wholesale inflation accelerated in April to the fastest pace since 2022 as the conflict in the Middle East fed into higher freight transportation prices. Treasury 10-year yields rose toward the highest since July, while traders raised their bets on a hawkish Fed. That’s negative for gold as it pays no interest.

The producer price index rose 6% from a year ago, topping all estimates in a Bloomberg survey of economists. The monthly gain was also the sharpest since 2022. A core measure that excludes food and energy increased 5.2% from April 2025 — the biggest advance in more than three years.

After falling sharply in the early days of the Iran war, gold has traded in a tight range as investors oscillate between inflation risks that could keep rates higher and growth concerns that could prompt easing as the conflict drags on.

Meanwhile, India, the world’s second-biggest gold consumer, raised import tariffs on gold and silver to about 15% from 6%. The surprise move came as the nation attempts to defend its currency and shore up foreign-exchange reserves.

Silver surged to the highest in more than two months, on course for its seventh consecutive gain and the longest winning streak since December. The market has been partly supported by renewed buying in China, acccording to TD Securities.

Top traders on the Shanghai Futures Exsinschange have been steady buyers of silver over the past month, senior commodity strategist Ryan McKay said in a note.

Prices in China have stayed higher than overseas markets, and at times it has been profitable to import silver into the country in the last couple of weeks, pointing to solid demand. This suggests that Chinese buying, rather than fund flows, may now be helping support prices, according to McKay.

Spot gold was 0.6% lower at $4,688.16 an ounce as of 11:30 a.m. in New York. Silver, which has risen 19% in May, gained 2.1% to $88.24. Platinum and palladium both advanced. The Bloomberg Dollar Spot Index rose 0.1%.

--With assistance from Masaki Kondo, Yihui Xie and Jack Ryan.

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