Gold Slides as Dollar Strength and Fed Rate Bets Weigh
Gold prices dropped more than 2% to around $3,880 an ounce on Thursday, retreating to levels not seen in months, pressured by a stronger US dollar, expectations of further monetary tightening by the Federal Reserve and rising oil prices. Stronger-than-expected US consumer inflation data for October, released on Tuesday, boosted the dollar to a 19-month high as traders increased bets on further Fed rate hikes. Meanwhile, renewed oil price gains added to inflation concerns after President Donald Trump said the US did not need a deal with Iran and redirected Vice President JD Vance towards domestic priorities, away from negotiations with Tehran. According to CME’s FedWatch Tool, markets are pricing in nearly a 90% chance of a 25-basis-point rate hike in December, while the probability of a larger 50-basis-point increase has risen to around 10%, from zero before the inflation data.
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Gold prices dropped more than 2% to around $3,880 an ounce on Thursday, retreating to levels not seen in months, pressured by a stronger US dollar, expectations of further monetary tightening by the Federal Reserve and rising oil prices. Stronger-than-expected US consumer inflation data for October, released on Tuesday, boosted the dollar to a 19-month high as traders increased bets on further Fed rate hikes. Meanwhile, renewed oil price gains added to inflation concerns after President Donald Trump said the US did not need a deal with Iran and redirected Vice President JD Vance towards domestic priorities, away from negotiations with Tehran.
According to CME’s FedWatch Tool, markets are pricing in nearly a 90% chance of a 25-basis-point rate hike in December, while the probability of a larger 50-basis-point increase has risen to around 10%, from zero before the inflation data.