Gold slips as higher oil, US inflation data bolster Fed hike bets
GLD•Spot gold fell 0.6% to $3,997.39 an ounce as higher oil prices and accelerating US inflation strengthened expectations of a Federal Reserve rate hike. Traders priced in a 75% chance of a December hike, and gold was on track for a second straight monthly decline.
1. Gold extends monthly decline
Spot gold was down 0.6% at $3,997.39 per ounce, while US gold futures for December delivery fell 0.6% to $4,007.80. Bullion was on track for a second consecutive monthly decline. Silver fell 2.1% to $51.27 an ounce, platinum dropped 1.9% to $1,458.85 and palladium declined 2% to $986.08; all three were headed for weekly and monthly declines.
2. Rate hike bets strengthen
US inflation accelerated in September as consumers paid more for gasoline and other goods. Traders priced in about a 75% chance of a Federal Reserve rate hike in December. Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.
3. Oil adds inflation pressure
Oil prices climbed and were on track for a fourth monthly gain, the steepest since July, on supply concerns after Yemen's Iran-aligned Houthis stepped up attacks on Saudi Arabia. Tim Waterer, chief market analyst at KCM Trade, said gold was testing technical support around $4,000 and that it remained to be seen whether value buying would limit declines.
