Spot gold rose 1.3% to $4,158.63 per ounce, rebounding from a one-week low after the US dollar slipped from an 18-month peak, as traders weighed a hot consumer inflation report that raised the probability of a Federal Reserve interest rate hike this month.
The Bottom Line
- Spot gold increased 1.3% to $4,158.63 per ounce by 0257 GMT on Thursday, according to Reuters, recovering from its lowest level since October 7.
- Traders priced in a 27% probability of a Federal Reserve rate hike for October, up from 22% prior to the Consumer Price Index release, per the CME FedWatch Tool. TipRanks noted a separate CME FedWatch reading showing the odds of a 25-basis-point hike at the October 28 Federal Open Market Committee meeting reaching 34.9%.
- Market participants awaited upcoming Producer Price Index and retail sales data scheduled for release at 1230 GMT.
Inflation Accelerates
US consumer prices accelerated in September, pushing the Consumer Price Index up 3.7% for the 12 months ended September, according to data from the Bureau of Labor Statistics. The reading topped market forecasts of 3.6%. Chicago Fed President Austan Goolsbee described the figures as “discouraging” and cautioned that the rapid expansion of artificial intelligence infrastructure could also be overheating the economy.
Higher interest rates and elevated Treasury yields increase the opportunity cost of holding precious metals like gold and silver, which do not generate interest. Both the 10-year and 30-year yields traded at multi-decade highs, pressured by oil prices, sticky inflation, and a record-high federal deficit, as detailed by TipRanks. Consequently, gold and silver had dropped in the previous session, with losses of 1.56% and 5.76% respectively on Wednesday.
Dollar Retreats From Peak While Fed Officials Weigh Actions
The US dollar eased after scaling an 18-month peak overnight, making greenback-priced bullion more affordable for overseas buyers and triggering gold’s rebound. US gold futures for December delivery rose 1.8% to $4,180.00 per ounce. In domestic and global commodity markets, gold futures on Comex traded near $4,190 per ounce, while on the Multi Commodity Exchange, benchmark December gold contracts opened ₹181 higher at ₹1,48,631 per 10 gram.
Federal Reserve officials offered mixed signals regarding the policy path ahead. San Francisco Fed President Mary Daly stated that the central bank will probably need to increase short-term interest rates further, though she signaled no need for a hike at the October 27-28 meeting. Vice Chair for Supervision Michelle Bowman added that there is time to wait and see before taking further action.
| Precious Metal | Market / Contract | Price Movement | Data Reference |
|---|---|---|---|
| Spot Gold | Global Spot | Up 1.3% to $4,158.63/oz | Reuters |
| US Gold Futures | December Delivery | Up 1.8% to $4,180.00/oz | Reuters |
| Spot Silver | Global Spot | Up 1.1% to $56.26/oz | Reuters |
| Spot Platinum | Global Spot | Up 0.3% to $1,611.15/oz | Reuters |
| Spot Palladium | Global Spot | Up 1.3% to $1,107.83/oz | Reuters |
Technical Pressures and Upcoming Data Focus
Market analysts pointed to ongoing uncertainty surrounding US interest rate policy as the primary driver of recent market volatility. Kyle Rodda, senior financial market analyst at Capital.com, noted that gold was approaching a critical level just below $4,000. Ajay Kedia, director at Kedia Advisory, observed that selling pressure was technically building in gold and silver, with rising open interest indicating the creation of fresh short positions as prices declined in domestic commodity markets.
Attention shifted to upcoming economic releases. Market focus turned to the Producer Price Index and retail sales data scheduled for release at 1230 GMT.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
Worth a look
