US Economy Starts 2023 with Stagflationary Flavor: What Does This Mean for Gold and Silver?

The US economy has started the year 2023 on a disappointing note, with business activity in both the manufacturing and services sectors contracting sharply in January.[0] Despite economic data released this past week showing that consumer demand was falling and wholesale prices were cooling, the Federal Reserve’s policy tightening efforts appear to be working.[1]

In January, the US Services Business Activity Index rose to 46.6 from 44.7 in December 2022.[0] Retail sales fell by 1.1%, following a 1.0% decline a month earlier, and Real Retail Sales fell at a -2.5% annual rate in Q3 and Q4.[2] Industrial Production dropped by -0.8% in December, following a decrease of -0.6% in November.[2]

The Fed is expected to raise rates by 0.25 percentage points on Wednesday, and the market is split over whether to raise rates by a further 0.5 percentage points or step down to a quarter-point increase.[3] However, the data indicates that the private sector contractions continued into the new year and that inflationary pressure is increasing, creating a stagflationary flavor.[0]

What does this mean for gold and silver outlook for 2023?[0] The price of gold has been rising recently on hopes of a more dovish monetary policy and a Fed pivot.[0] Any hawkish surprise could send gold prices down, but the dovish outlook is more likely considering that the most prominent hawks aren’t voting in 2023.[4] Ultimately, it’s too early to declare the comeback of inflation as input costs accelerated, but it hasn’t translated into higher output prices yet.[0]

0. “The Fed’s crossroads – hawkish or dovish?” FXStreet, 25 Jan. 2023,

1. “The Fed and the Markets Disagree on Wages and Inflation. That’s a Problem.” Barron’s, 20 Jan. 2023,

2. “Markets To Fed: We’re Easing Whether You Like It Or Not” Forbes, 21 Jan. 2023,

3. “The Week Ahead: Fed, BoE, ECB interest rate decisions; Shell, BT, US tech results” CMC Markets, 27 Jan. 2023,

4. “The Fed’s Crossroads – Hawkish Or Dovish? | MENAFN.COM” MENAFN.COM, 26 Jan. 2023,