Gold Slides Below $4,000 on Fed Rate Hike Bets

Gold fell below $4,000 an ounce as a 19-month-high dollar and 5% Treasury yields lifted bets on a December Fed rate hike after hot October inflation data.

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What Pushed Gold Below $4,000?

Hotter-than-expected inflation data triggered the selloff. Headline consumer prices rose 0.4% in October, and core prices, which strip out food and energy, rose 0.3% for a second straight month. Energy prices rose 0.7%, food 0.5% and shelter 0.3%.

Gold pays no interest, so higher yields raise the opportunity cost of holding it. A stronger dollar also makes dollar-priced bullion more expensive for buyers in other currencies. Both forces hit at once. The dollar index gained about 0.7% to roughly 102.9, and the 10-year yield returned to about 5%, up around 10 basis points on the day of the report.

Spot gold closed Wednesday at $3,983.20, down 1.2%. US gold futures were near $3,994 on Thursday. Silver was steadier at about $51.60 an ounce, platinum was near $1,535 and palladium near $1,032.

How Large a Fed Rate Hike Is Priced In?

Markets fully price a 25 basis point increase at the December 8-9 meeting of the federal reserve. The probability of a 50 basis point move rose to about 13% from zero before the inflation report, while the odds of a quarter-point hike stand near 87%.

The benchmark rate sits at 3.75%-4% after the central bank voted 10-2 to hold it in October. Futures also show three more quarter-point increases by mid-2027.

Policymakers have reinforced the repricing. Chicago Fed's president called the October inflation report "borderline disturbing." Another Fed governor warned that elevated price pressures are not driven by temporary factors. A core reading of 0.3% for two months in a row also matches the pace that one governor has cited as grounds for weighing a half-point increase.

Why Is Inflation Complicating the Outlook?

Price pressures are broadening beyond energy. Brent crude traded near $92.76 a barrel and WTI near $86.53, adding to headline costs. Labor data offers the central bank no reason to ease. October payrolls grew by 165,000, unemployment stands at 4.1% and hourly earnings rose 0.4%.

The labor department did not publish year-over-year inflation rates for October because of data gaps from last year's government shutdown. Month-on-month readings are therefore driving market reaction.

Market Reaction and Positioning

The decline extends a slide that began at the late-January peak. Gold fell 9.5% on the session after the record, its largest one-day drop since 1983. The SPDR Gold Shares ETF (GLD) has seen more than $14 billion in outflows since March, as investors rotated toward semiconductor and industrial-metal stocks tied to artificial intelligence hardware demand. The iShares Silver Trust (SLV) tracks a silver market that has held up better than gold this week.

On the charts, first support sits at $3,910 and then $3,890. Resistance lies near $4,020 and $4,065.

What Comes Next for Gold?

The near-term path depends on the dollar, yields and the next inflation print. A softer dollar or weaker data would ease pressure on bullion. Another hot reading would raise the odds of a 50 bp hike and extend the dollar rally. Further hikes in 2027 would keep real yields high, which has historically capped gold. Central bank purchases and geopolitical risk, the metal's usual supports, have not offset the rate pressure in recent weeks.

Outlook

Gold has lost its footing below $4,000 as a strong dollar, 5% yields and a December rate increase combine against it. The next catalysts are Fed speakers ahead of the December 8-9 meeting and the November inflation report. Until rate expectations stop rising, the metal faces the same headwinds that have pulled it down from January's record.