Gold faces selling pressure at $4,050 as hot October inflation data fuels expectations for further Fed tightening, boosting the US Dollar and Treasury yields.
The hot October CPI (0.4% MoM headline, 0.3% core) and hawkish Fed officials have driven traders to fully price a December hike and three more hikes by mid-2027, boosting demand for the Dollar. The Greenback extended gains with DXY around 102.50, near the October year-to-date high of 102.94, leaving room for a break higher.
October CPI came in hot (0.4% MoM vs 0.3% forecast, core 0.3% vs 0.2% expected) and Waller said a 50 bps December hike may be needed, pushing markets to fully price a December hike. Higher rates, a stronger Dollar near its 102.94 YTD high and elevated yields pressure Gold, which fell 2.67% on Tuesday. Central bank buying and ETF inflows provide a longer-term floor, but near-term bias is bearish below the 21-day SMA at $4,058.
Hot October inflation data and repriced Fed rate-hike expectations triggered a sharp Treasury sell-off: the 10-year yield rose roughly 14 bps on Tuesday and briefly moved back above 5%. Expectations of further tightening keep upward pressure on yields, though the bond market is closed Wednesday for Veterans Day, pausing the move.
Gold trades at $4,050 as markets fully price in a December Fed rate hike following an October CPI print of 0.4% MoM. Hawkish signals from Fed Governor Waller and rising Treasury yields, with the 10-year briefly topping 5%, continue to pressure the yellow metal. While dip-buying provides minor support, the bearish bias remains as the price holds below the 21-day SMA of $4,058.
Traders now fully price a Fed rate hike in December after October inflation came in above forecasts, and higher expected rates increase demand for the US Dollar.
The Dollar Index trades around 102.50, approaching the year-to-date high of 102.94 reached in October.
Hotter-than-expected October US inflation and hawkish Fed comments have boosted expectations of a December rate hike, lifting the US Dollar and Treasury yields, which weigh on gold.
Resistance sits at the 21-day SMA near $4,058, then $4,178 and $4,201. Support is the psychological $4,000 level, followed by the yearly low of $3,870.23.
October inflation came in above forecasts and Fed officials signaled possibly larger rate hikes, prompting traders to price more Fed tightening and sell US government bonds.
The 10-year yield rose roughly 14 bps on Tuesday and briefly moved back above 5%, while the 2-year yield jumped around 19 bps.