Gold tumbles below $4,000 as persistent inflation and hawkish Fed commentary, including Goolsbee's concerns over 'real inflation,' drive expectations for higher interest rates.
Gold tumbled to near $3,985, falling below $4,000, after October CPI rose 0.4% MoM versus 0.3% expected, boosting bets on a Fed rate hike at the December meeting. Higher interest rates make yield-bearing assets more attractive to the non-yielding metal. Technicals reinforce the bearish bias with price below the 20-day and 100-day SMAs and RSI at 43.
Hot October CPI (+0.4% MoM vs 0.3% expected) and Goolsbee's 'real inflation issue' remarks, with an 8/10 FXS Speechtracker score and the FXS Fed Sentiment Index up 1.69 points to 145.61, support a higher-for-longer Fed path. The article states this backdrop is typically constructive for the Dollar against lower-yielding peers.
The 10-year US Treasury yield is quoted up +1bps at 4.87%, and a hotter Fed path following the CPI beat tends to push yields higher. Counteracting this, the broader risk-off tone from the AI selloff has been bringing sovereign bond yields down around the world.
Gold prices fell to near $3,985 as hotter-than-expected October CPI data, which rose 0.4% MoM, increased the likelihood of a Federal Reserve rate hike in December. The probability of a 50-basis-point hike has climbed to 12.7%, pressuring the non-yielding metal as the US Dollar gains strength from a hawkish Fed sentiment index of 145.61.
Hotter-than-expected US inflation (CPI +0.4% MoM in October vs 0.3% expected) has raised expectations the Fed will hike rates in December, and higher rates typically weigh on gold by making interest-bearing assets more attractive.
The article flags the lower Bollinger band near $3,895 as the next notable support, while resistance sits at about $4,055, then the 100-day SMA at $4,200.
Sticky inflation and hawkish Fed commentary have lifted bets on a December rate hike, with the 50 bps possibility rising to 12.7% from 0%, supporting a higher-for-longer Fed path that favors the Dollar.
The article cites the 10-year US Treasury yield at 4.87%, up 1 basis point, despite the risk-off tone that has been pushing global sovereign yields lower.