The risk of stagflation in the US is increasing! Gold and silver's "anti-inflation" properties are being highly regarded.

U.S. 2025 GDP Data Released: Economy Slows, GDP Falls to Lowest Level Since 2021, While Core Inflation Surpasses Expectations, Increasing Year-over-Year by 3%. Concerns Over Stagflation Risk Rise, and Gold’s “Inflation Hedge” Attribute Gains Investor Favor.

More notably, a ruling by the U.S. Supreme Court has resulted in $175 billion in tariff refunds, which could directly impact U.S. government revenue, potentially forcing the federal government to further increase debt, heightening investor concerns over U.S. Treasury creditworthiness, and prompting increased gold holdings as a risk hedge.

On Friday, February 20, gold futures contracts surged by 2.65%, while silver futures rose by 8.93%. The Bloomberg Commodity Index, tracking the performance of 25 major commodities futures, has gained over 10% since the beginning of the year.

U.S. Core Inflation Still Faces Upside Risks

On February 20, local time, the U.S. announced its 2025 GDP data. The actual U.S. GDP in 2025 grew by 2.2% year-over-year, lower than 2.8% in 2024, marking the lowest level since 2021.

Data also shows that, affected by government shutdowns and weak consumer spending, U.S. economic growth in Q4 2025 slowed sharply to an annualized rate of 1.4%, well below economists’ forecast of 3%, and a steep decline from the 4.4% growth in Q3.

Additionally, the Federal Reserve’s preferred inflation indicator—the Personal Consumption Expenditures (PCE) index—increased by 0.4% month-over-month in December last year, exceeding the previous forecast of 0.3%. Year-over-year, it rose by 3.0%, continuing to stay above the Fed’s 2% policy target. The sticky inflation and sluggish economic growth have raised concerns about stagflation, intensifying market worries about the U.S. economic fundamentals.

Previously, the U.S. Bureau of Labor Statistics (BLS) released January 2026 CPI data on February 12. The January CPI increased from 2.9% to 3% year-over-year, while core CPI rose from 3.2% to 3.3%. The CPI month-over-month was 0.5%, the highest since September 2023; core CPI month-over-month was 0.4%, the highest since May 2023.

Clearly, whether it’s the December PCE or the January core CPI, the year-over-year increases are above 3%, well above the Fed’s 2% long-term target. Persistent high inflation amid economic underperformance has increased uncertainty risks, with market expectations of a rate cut by the Fed before June decreasing slightly to 54%.

Gold and Silver’s “Inflation Hedge” Attributes Are Favorable

The rebound in inflation pressures combined with slowing economic growth has sparked concerns about stagflation in the U.S., boosting gold’s “inflation hedge” appeal among investors, leading to a significant rise in international gold prices. As of the close on February 20, the April gold futures price on the New York Mercantile Exchange was $5,130 per ounce, up 2.65%.

Meanwhile, AI and chip stocks in the U.S. stock market rebounded broadly, supporting expectations that AI development will boost silver demand. As of the close on February 20, the March silver futures price on the NYMEX was $84.57 per ounce, up 8.93%.

Data shows that over the past week, ongoing Middle East geopolitical tensions coupled with rising U.S. inflation pressures have driven investors to continue buying precious metals, pushing international gold and silver prices higher for the week. Gold prices on the NYMEX increased by 1.31%, and silver prices rose by 9.45%.

Additionally, data from the U.S. Commodity Futures Trading Commission (CFTC) as of the week ending February 17 shows that speculative net long positions in COMEX gold increased by 3,020 contracts to 96,057 contracts. In COMEX silver, speculative net longs increased by 1,575 contracts to 6,160 contracts; copper speculative net longs decreased by 1,570 contracts to 52,700 contracts.

In the crude oil market, WTI net long positions decreased by 2,904 contracts to 67,884 contracts. In natural gas, speculative net longs across NYMEX and ICE’s four major markets decreased by 19,927 contracts to 124,810 contracts.

$175 Billion Tariff Refund

Notably, a Supreme Court ruling could force the U.S. government to further increase debt, raising concerns among investors about U.S. Treasury creditworthiness and prompting increased gold holdings as a risk hedge.

On February 20, the Supreme Court announced a ruling that found the Trump administration’s large-scale tariffs enacted under the International Emergency Economic Powers Act (IEEPA) to be unlawful. Specifically, in a 6-3 decision, the Court held that the Trump administration exceeded its presidential authority when imposing these import taxes. The ruling invalidated all tariffs imposed under IEEPA.

According to UBS analysis, this accounts for approximately 75% of all tariffs imposed by Trump last year, including so-called “reciprocal tariffs” on imports from most economies worldwide. However, tariffs on specific goods such as automobiles and steel remain in place, as they are authorized under another law—the 1962 Trade Expansion Act, Section 232.

The Supreme Court’s decision directly threatens the U.S. government’s budget deficit and could introduce new variables into the U.S. economy. Following the ruling, long-term U.S. bonds declined, with the 30-year Treasury yield rising by 6 basis points to 4.75%. Meanwhile, short-term rates remained high, with the 2-year Treasury yield rising by 2 basis points to 3.48%.

Industry experts believe that if the government is forced to refund $175 billion in tariffs, the more urgent issue will be short-term liquidity risk. To raise funds, the government may need to expand short-term financing, which could have an immediate and significant impact on the markets.

(Source: Securities Times)