Gold struggles below $4,000 as the US Dollar hits fresh highs since April 2025, supported by a 10-year Treasury yield above 5% and firm expectations for a December Fed rate hike.
The dollar index has been pushed to its highest level since April 2025 by hot October CPI data, hawkish FOMC comments including Waller's, a market fully priced for a December hike with 50-bps risk on the table, and a 10-year yield above 5%. Rabobank notes fading political-pressure fears after the midterms reinforce the Fed's freedom to tighten, backing further dollar gains.
Gold has fallen for three straight sessions and trades below $4,000, near its lowest in over a week, as the dollar hits its highest level since April 2025 on a fully priced December Fed hike and even bets of a 50-bps move. With the 10-year yield back above 5%, the article states the path of least resistance for gold is to the downside, though a closure of the Strait of Hormuz could revive safe-haven demand.
After hot October CPI data and hawkish FOMC comments, with a December hike fully priced and even a 50-bps move being considered, the 10-year Treasury yield moved back above the 5% threshold on Wednesday and continues to act as a tailwind for the dollar.
Gold prices remain under pressure, trading below the $4,000 mark for the third consecutive session as the US Dollar Index climbs to its highest level since April 2025. The rally in the greenback is fueled by hot October CPI data and market expectations for a December Fed rate hike, with some traders pricing in a potential 50-basis-point increase.
Hot October CPI inflation data, hawkish Fed comments that put a possible 50-bps December hike on the table, and a 10-year yield back above 5% have lifted the dollar index to its highest level since April 2025.
The article states these factors 'back the case for additional gains', though upcoming jobless claims data, Fed speeches and geopolitical headlines may cause volatility.
The dollar is rallying on firm Fed rate-hike bets after hot October CPI data, pushing the DXY to its highest since April 2025, and this dollar strength is overpowering the geopolitical risk premium from the Strait of Hormuz standoff.
Support sits at $3,976 (61.8% retracement), then $3,930 and $3,870, while resistance is at $4,009 and a dense barrier around $4,041-$4,044, with a cycle high anchor near $4,147.
Hot October inflation data and hawkish Fed commentary, including Waller putting a 50-bps December hike on the table, led markets to fully price a December rate hike, pushing the yield back above the 5% threshold on Wednesday.