Gold gains after steep drop, but hawkish central bank signals weigh
GLD•Spot gold rose 0.6% to $4,055 an ounce on Wednesday after falling nearly 3% Tuesday. October US consumer prices rose 0.4%, lifting traders’ probability of a December Fed rate hike to 100%.
1. Gold rebounds modestly
Spot gold rose 0.6% to $4,055 an ounce by 1122 GMT, while December US gold futures gained 0.8% to $4,063.20. Gold had dropped around 3% to $4,013.29 on Tuesday after US inflation data and hawkish policymakers’ comments boosted expectations for further rate hikes.
2. Rate expectations rise
US consumer prices increased 0.4% in October, above economists’ 0.3% forecast. Traders raised the odds of a December Federal Reserve rate hike to 100% from 84% before the data, and expectations of a half-percentage-point increase also rose. Higher interest rates diminish gold’s appeal because bullion pays no interest.
3. Other metals advance
Spot palladium gained 5.6% to $1,082.57 an ounce, reaching its highest level since October 22. Spot silver climbed 3% to $53.03 an ounce.
