Gold edges higher after sharp selloff, Fed hike bets weigh
GLD•Spot gold rose 0.3% to $4,043.62 an ounce after falling nearly 3% on Tuesday, while stronger-than-expected US inflation data lifted expectations of a December Fed rate hike. Traders priced in a 100% probability of a rate increase, up from 84% before the data.
1. Gold recovers slightly
Spot gold was up 0.3% at $4,043.62 per ounce by 0303 GMT on Wednesday, following a nearly 3% drop to $4,017.21 on Tuesday. US gold futures for December delivery gained 0.5% to $4,051.10.
2. Rate expectations rise
US inflation accelerated more than expected in October, and traders now see a 100% probability of a Fed rate increase in December, up from 84% before the data. Higher interest rates increase the opportunity cost of holding non-yielding gold, reducing its appeal to investors.
3. Analysts weigh outlook
Matt Simpson of StoneX described the rebound as a technical retracement after Tuesday’s losses, with investors awaiting another catalyst. ANZ analyst Soni Kumari said the near-term macro setup for gold did not seem positive, while noting that positive developments in the Middle East could support gold from an inflation standpoint. Spot silver rose 1.7% to $52.38 per ounce, and palladium gained 1.3% to $1,038.38.
