Gold gains after steep drop, but hawkish central bank signals weigh
GLD•Spot gold rose 0.5% to $4,051.31 an ounce on Wednesday after dropping as much as 3% on Tuesday. Traders priced in a 100% probability of a Federal Reserve rate hike in December after US consumer prices rose 0.4% in October.
1. Gold edges higher
Spot gold rose 0.5% to $4,051.31 per ounce by 0916 GMT, recovering slightly after falling as much as 3% to $4,013.29 on Tuesday. US gold futures for December delivery gained 0.7% to $4,059 per ounce.
2. Rate expectations rise
US consumer prices increased 0.4% in October, above economists’ 0.3% forecast. Traders raised the probability of a December Federal Reserve rate hike to 100% from 84% before the data, with expectations of a half-percentage-point increase also rising. Fed officials signalled that further rate hikes remained possible.
3. Other metals advance
Analyst Han Tan said gold had seen slight relief after its post-CPI declines, but that further Fed rate hikes could make it difficult for prices to keep rising. Silver climbed 2.7% to $52.87 per ounce, while palladium gained 4.1% to $1,066.66.
