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Silver and Gold Ignore the Fed on Inflation

Gold and silver are flashing inflation warnings, even as Fed Chairman Ben Bernanke attempted to allay concerns about rising prices.

Gold Wednesday rose to an all-time high near $1530 an ounce, after the Fed and later, Bernanke, in his first ever press briefinig, gave a nod to the idea that the Fed would keep zero interest rates on hold for a good while. Gold finished at $1,517.10, up $13.60.

Silver's move was even more dramatic, vaulting 2 percent to $45.9640 an ounce.

"I think what the comments show is both the Fed statement and Bernanke's press conference...they just reaffirm that QE (quantitative easing) is ending, but they did also go on to say that with this economy expanding only moderately, accommodative policies are appropriate and that's very supportive of gold because, whether or not inflation is coming, certainly gold investors seem to be favoring that it does," said Jim Steel, HSBC chief commodities analyst.

Bernanke, in his comments, acknowledged increasing commodities prices are boosting overall consumer inflation, but he said measures of underlying inflation have increased modestly and longer-term inflation expectations have been stable. The Fed, therefore, expects the effects on inflation from rising commodity prices to be temporary.

"On the face of that, both gold and silver went up anyway. It implies there's a little disconnect there," said Steel.

"That played a role in the dollar coming down and the euro continue to be strong. With that and the crude market rallying, it reinforced what went on in gold and silver," he said.

The dollar lost a percent against the euro, which was at 1.4794.

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  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.