Gold dropped 0.70% to $3,999 as a hotter-than-expected inflation report and hawkish Fed rhetoric drove the US Dollar Index to a yearly high of 102.90.
Gold fell below $4,000 to $3,999 (-0.70%) for a second straight day after hotter-than-expected CPI (core 0.3% MoM) led markets to fully price a 25 bps Fed hike in December, with 87% odds per CME FedWatch. As a non-yielding metal, gold suffers from higher rates and a surging US Dollar Index at 102.90. Technicals (lower lows, bearish RSI) point to further downside toward $3,919 and $3,879 supports.
The DXY rose 0.67% to 102.90, a yearly high, as the US 10-year Treasury yield climbed nearly 12 basis points to 5%. Markets fully price a December Fed rate hike (87% for 25 bps, 13% for 50 bps) after core CPI beat estimates at 0.3% MoM, supporting the dollar against its basket of six currencies.
The US 10-year Treasury yield rose nearly 12 basis points to 5% after hotter-than-expected CPI (headline 0.4% MoM, core 0.3% MoM versus 0.2% expected) led investors to fully price a 25 bps Fed rate hike in December. Hawkish Fed commentary reinforced expectations of higher rates for longer.
Gold prices fell to $3,999 on Wednesday, marking a second consecutive day of losses as markets fully price in a December Federal Reserve rate hike. The move follows core CPI data printing at 0.3% MoM for the third straight month, fueling hawkish sentiment and pushing the US 10-year Treasury yield up 12 basis points to 5%.
A hotter-than-expected US inflation report and hawkish Fed comments led traders to fully price a December rate hike, pushing the dollar and Treasury yields up, which pressures the non-yielding metal.
The first support is the November 4 daily low of $3,919, followed by the October 30 year-to-date low of $3,879, while $4,000 is now the key resistance.
Hotter core CPI inflation and hawkish Fed comments led markets to fully price a December rate hike, and rising 10-year Treasury yields at 5% are a tailwind for the dollar.
October CPI came in hotter than expected, especially core CPI at 0.3% MoM, leading markets to fully price a December Fed rate hike and pushing the yield up nearly 12 basis points.