Gold prices fell to $4,021 as a 0.4% headline CPI print and hawkish Fed commentary pushed the US Dollar Index to 102.36 and Treasury yields above 5%.
Gold fell nearly 3% from $4,146 to about $4,021 after October CPI beat forecasts (0.4% MoM headline, 0.3% core) and Fed officials flagged bigger hikes, with Waller signalling 50 basis points on a 0.3% core print. Rising yields above 5% and a stronger dollar pressure the yield-less metal. Sellers now target a break below $4,000, opening the way to $3,919 and $3,870.
The hotter-than-expected October CPI (0.4% headline, 0.3% core MoM) plus hawkish comments from Waller and Logan led markets to fully price a 25-basis-point December hike, with 10% odds of 50 points. The DXY rose nearly 0.70% to 102.36 as a result, and Fed officials' rate-hike bias supports further dollar strength.
The 10-year Treasury yield soared 12 basis points to 5.012% after October CPI beat forecasts and Fed officials backed larger rate hikes, with investors increasingly confident a December hike is coming. Sticky inflation (core unchanged at 0.3% MoM) argues for higher yields in the near term.
Gold prices tumbled nearly 3% to $4,021 on Tuesday as hotter-than-expected October inflation data fueled hawkish Federal Reserve rhetoric. With core CPI rising 0.3% MoM, Fed officials Waller and Logan signaled the potential for more aggressive rate hikes, pushing the 10-year Treasury yield up 12 basis points to 5.012%.
Hotter-than-expected October inflation data led Fed officials to signal larger rate hikes, pushing the dollar and Treasury yields higher, which weighed on gold, now trading near $4,021 after a near 3% fall.
A decisive break below $4,000 could send gold toward $3,919 and $3,870, while reclaiming $4,050 would open the path to $4,100 and then the $4,185-$4,200 resistance zone.
Strong inflation data and hawkish Fed commentary have led traders to fully price a December rate hike, lifting the DXY nearly 0.70% to 102.36.
Money markets put 10% odds on a 50-basis-point hike in December, after Governor Waller said a 0.3% core CPI print warrants a bigger increase.
Hotter-than-expected inflation and hawkish Fed comments boosted expectations of a December rate hike, pushing the 10-year yield up 12 basis points to 5.012%.