Gold falls more than 2% as CPI tops forecasts, lifting dollar and yields
GLD•Gold fell 2.1% to $4,051.50 an ounce after US CPI rose 0.4% in October, above economists’ 0.3% forecast, lifting the dollar and Treasury yields.
1. Gold prices decline
Spot gold fell 2.1% to $4,051.50 per ounce by 9:27 a.m. ET, while US gold futures for December delivery fell 1.34% to $4,059.30. Silver declined 2.9% to $51.86 an ounce and palladium fell 1.0% to $1,031.20.
2. Inflation exceeds forecasts
The Consumer Price Index rose 0.4% in October after increasing 0.6% in September; economists had forecast a 0.3% monthly rise. The dollar and Treasury yields climbed as traders reassessed the outlook for Federal Reserve rates. Fed governor Christopher Waller said he would support more aggressive action if inflation proved too hot.
3. Rate expectations shift
The chance of a 50-basis-point rate hike in December rose to around 13.6% from 0% before the data, according to CME’s FedWatch Tool. A stronger dollar makes gold more expensive for holders of other currencies, while higher Treasury yields raise the opportunity cost of holding bullion.
