Gold trades at $3,952 as a 0.3% core CPI print boosts the US Dollar to a year-to-date high of 103.08, reinforcing expectations for aggressive Federal Reserve rate hikes.
Core CPI rose 0.3% against a 0.2% forecast, confirming Fed Governor Waller's condition for a 50bps December hike and driving the DXY to a fresh year-to-date high near 103.08. Markets price around 28bps of hikes by December and 43bps by January, with real front-end rate differentials fuelling Dollar momentum per ING. The Dollar has since eased to DXY near 102.88, tempering but not reversing the move.
Gold slipped below $4,000 to around $3,952, down 0.82%, after October core CPI came in at 0.3% versus the 0.2% forecast, validating Fed Governor Waller's call for a possible 50bps December hike. Higher rates and a dollar at a fresh year-to-date high (DXY near 102.88) weigh on the yield-less metal. Bearish daily technicals (RSI ~41, price below the 20-day SMA at $4,042) support further downside toward support at $3,885.
The Wall Street Journal reports US Vice President JD Vance is weighing face-to-face talks with senior Iranian security official Mohsen Rezaei, though the discussions are preliminary with no date set. Signs of progress toward a deal could keep Oil prices under pressure, and a sustained drop in Oil could in turn ease inflation and soften Fed hike bets. The impact is indirect and hinges on talks actually advancing.
Gold prices fell to $3,952, down 0.82%, as hotter-than-expected October core CPI of 0.3% fueled expectations for a 50-basis-point Fed rate hike in December. The US Dollar Index reached a year-to-date high of 103.08, pressuring the yield-less metal as markets price in 43bps of total tightening by January.
October core CPI beat forecasts at 0.3%, cementing expectations for aggressive Fed rate hikes in December and January, and higher US rates relative to other economies are driving the Dollar to year-to-date highs.
Possibly: ING notes the Dollar's strength relative to short-term fair value is contained, and if US-Iran talks lower Oil prices and cool inflation, traders could scale back bets on aggressive Fed hikes.
Hotter-than-expected US inflation (core CPI up 0.3% versus 0.2% forecast) has lifted bets that the Fed may hike by 50bps in December, boosting the Dollar and making interest-paying assets more attractive than the yield-less metal.
Resistance sits at $4,000 and the 20-day SMA at $4,042; below, immediate support is the lower Bollinger band near $3,885, and a decisive break under that could reinforce the bearish bias.
According to the article, signs of progress toward a deal between the US and Iran could keep Oil prices under pressure.