Gold prices came under pressure again during Wednesday’s trading (Nov 11), following an earlier rally toward US$4,066 per ounce. Spot gold subsequently fell 0.41% to US$4,014.26, signaling that the price recovery could not be sustained amid pressure from expectations of tighter US monetary policy.
This pressure intensified after the US Consumer Price Index (CPI) for October showed a 0.4% monthly increase—surpassing the 0.3% forecast. The hotter-than-expected inflation data suggests the Federal Reserve has a stronger case for raising interest rates at its December meeting.
Prior to the release of the CPI data, Fed Governor Christopher Waller had indicated that a 50-basis-point rate hike could be considered if the core CPI for October came in at 0.3% or higher. Following the data release, the market began factoring in the possibility of a 50-basis-point hike, although a 25-basis-point increase remains the primary scenario.
Expectations for a more aggressive policy stance pushed the US dollar to a four-week high. A stronger dollar weighs on gold, as it makes the precious metal more expensive for buyers using other currencies. Meanwhile, higher interest rates also diminish gold’s appeal, given that the metal does not generate a yield.
Nevertheless, the pressure on gold has not entirely extinguished buying interest. Central bank purchases continue to provide support, helping to anchor prices even as the short-term outlook faces headwinds from the dollar and interest rates.