Peter Schiff, chief economist and global strategist at Euro Pacific Capital, says the real reason gold prices are rising is because of the belief that inflation will continue to stay higher.

What Happened: "The catalyst for this morning's $20 jump in the #gold price is the Mar. #CPI rising a bit less than expected. But core CPI still spiked .4%, which annualizes to over 5%. The real reason gold is rising is that high #inflation is here to stay. Soon YoY CPI gains will hit new highs," Schiff tweeted.

The catalyst for this morning's $20 jump in the #gold price is the Mar. #CPI rising a bit less than expected. But core CPI still spiked .4%, which annualizes to over 5%. The real reason gold is rising is that high #inflation is here to stay. Soon YoY CPI gains will hit new highs.

— Peter Schiff (@PeterSchiff) April 12, 2023

Wednesday saw gold prices jump after U.S. inflation rate slowed more than expected to 5% year-on-year in March, marking the lowest print since May 2021. Spot gold was trading 0.37% higher, at 2,022.38, during Thursday afternoon Asian trading session. The $SPDR Gold ETF (GLD.US)$ and the $Gold Trust Ishares (IAU.US)$ gained over 0.49% on Wednesday.

Schiff also believes when the Fed actually ends up cutting rate, the markets are likely to witness a sell-off leading to fund flows into the yellow metal.

When the financial crisis finally causes the #Fed to cut rates, U.S. stock and bond markets will likely sell off, having already rallied in anticipation of that capitulation. But the dollar will fall too, sending investors into #gold, foreign value stocks, and emerging markets.

— Peter Schiff (@PeterSchiff) April 12, 2023

Expert Take: Edward Moya, senior market analyst at OANDA, told Reuters the risks of not raising rates enough far exceeds over-tightening and so the Fed may go forward with the quarter-point rate hike. "There's still a tremendous amount of risk on the table, so gold should still see some strong flows headed its way," Moya said.