gold and silver prices ended lower on tuesday as us inflation for august came in surprisingly strong raising the likelihood for further increases in interest rates and causing the dollar to rise and shortterm treasury yields to reach fresh 14year highs dollar strength is directly related to the cpi print and thats dragging on gold markets andrew schrage chief executive officer at money crashers told marketwatch the us consumerprice index rose by 01 in august economists polled by the wall street journal had forecast a 01 drop in the cpi whats worse the socalled core rate of inflation which omits food and energy rose by a sharp 06 higher than the 03 rise economists who participated in the wsj survey had expected it remains to be seen whether gold can shake off that correlation and resume its longerterm role as an inflation hedge he said but for now traders seem confident that inflation wont spiral out of control  just that the fed will need to act more aggressively and perhaps for longer than expected to tamp it down actions to tame inflation would likely include higher interest rates and higher interest rates can strengthen the dollar and weaken demand for dollardenominated commodities such as oil thats not great news for gold in the near term but as this cpi report reminds us inflation has proven difficult to predict so conditions can and may change quickly said schrage meanwhile more wall street economists now see the federal reserve moving interest rates higher than they previously expected in the wake of the ugly august consumer price inflation data economists at td securities said they now expect the fed to raise its benchmark rate by 75 basis points next week and in november followed by a 50 basis point move in december