Gold drops over 1% as hot US inflation data boosts Fed hike bets
GLD•Spot gold fell 1.7% to $4,086.06 an ounce after US consumer prices rose 0.6% in September, lifting market expectations for a Federal Reserve rate hike this month to 44% from 22%.
1. Inflation pressures gold
Gold fell for a third straight session on Wednesday after stronger-than-expected US inflation increased bets on a rate hike this month. Spot gold was down 1.7% at $4,086.06 an ounce, while US gold futures fell 1.6% to $4,108.60.
2. Rate expectations rise
The Consumer Price Index rose 0.6% in September after a 0.4% increase in August. The US dollar index gained 0.4% and 10-year Treasury yields rose. Markets priced in a 44% chance of a rate hike this month, up from 22% before the inflation data, and a 95% probability of an increase in December.
3. Other metals decline
David Meger of High Ridge Futures said the hotter-than-expected inflation data put pressure on gold as the dollar rose. Spot silver fell 4.1% to $56.99 an ounce, platinum dipped 2% to $1,629.79, and palladium fell 0.7% to $1,118.46.
