Abstract：Gold fell below the $4,000 mark in early Asian trading on Thursday, sliding to around $3,985 an ounce as a hotter-than-expected US inflation reading hardened expectations that the Federal Reserve will raise interest rates at its December meeting. According to FXStreet, the metal extended its decline as persistent inflation kept the Fed on a tightening path.
Gold fell below the $4,000 mark in early Asian trading on Thursday, sliding to around $3,985 an ounce as a hotter-than-expected US inflation reading hardened expectations that the Federal Reserve will raise interest rates at its December meeting. According to FXStreet, the metal extended its decline as persistent inflation kept the Fed on a tightening path.
ContentsA Hotter Inflation Print Than Expected
The US consumer price index (CPI), a broad measure of what households pay for goods and services, rose 0.4% in October on a seasonally adjusted basis, the Bureau of Labor Statistics reported. Economists surveyed by Dow Jones had expected a 0.3% increase. Core CPI, which strips out volatile food and energy costs, rose 0.3% against a forecast of 0.2%. Headline CPI had climbed 0.6% in September, while core was up 0.3% that month.
The details showed price pressure across several categories. Shelter costs rose 0.3% and accounted for more than 30% of the headline increase, according to the BLS. Food costs accelerated 0.5%, with snacks up 1%, beef up 0.9% and meats, poultry, fish and eggs up 0.5%. Transportation services jumped 0.8%, new vehicle prices rose 0.2% and used cars and trucks fell 1.2%. Apparel, a tariff-sensitive sector, rose just 0.1%, medical care commodities rose 0.5% and airline fares accelerated 0.4%.
Energy was mixed. The energy index rose 0.7% and gasoline was up 1%, even though pump prices had been falling in recent weeks, while natural gas slipped 0.8%. Electricity prices rose 0.9%, a point of pressure tied in the report to heavy spending by hyperscalers (large cloud and data-centre operators) on artificial intelligence infrastructure.
The BLS did not publish a year-on-year CPI rate for October. It said the government shutdown last year prevented it from collecting enough data in October 2025 to make a comparable calculation, though annual figures were available for some individual items. Inflation has been running above the Fed's 2% target for about five and a half years.
Fed Officials Signal More Tightening
The report landed at a sensitive moment for the Fed. At its October meeting, policymakers voted 10-2 to hold the benchmark rate in a range of 3.75% to 4% while waiting for more data. Speaking in London before the release, Fed Governor Christopher Waller said a hot inflation report could push him toward advocating a half-point increase in December, and that such a move should be on the table if core CPI came in around 0.3%. That is exactly what the data showed hours later.
Other officials went further. Dallas Fed President Lorie Logan said she sees a need for two additional quarter-point increases, calling the CPI report higher than expected and warning that the personal consumption expenditures price index, the Fed's preferred inflation gauge, could also rise when it is published later in November. “It may be possible to move more rapidly this winter than the [Federal Open Market Committee] has moved so far this fall,” she said, adding that after two more increases it would make sense to pause and assess conditions.
Philadelphia Fed President Anna Paulson listed tariffs, energy prices and the AI buildout as the main factors keeping inflation elevated, though she cited research suggesting tariff effects were beginning to fade. Even so, she said the data suggest “inflation pressures are still very much with us” and that “further gradual tightening seems appropriate” for now, with the exact path depending on how conditions evolve.
FXStreet also reported that Chicago Fed President Austan Goolsbee struck a more hawkish tone, calling the latest CPI “borderline disturbing,” saying services inflation is “not coming down” and warning that “we have a real inflation issue on our hands.” He described the job market as steady and stable and repeatedly flagged the risk of inflation expectations becoming unanchored.
Rate Bets and the Dollar
Traders responded quickly. A quarter-point increase at the Fed's December 8-9 meeting is now fully priced in, according to CME Group's FedWatch tool, while the odds of a half-point hike rose to 13.6% from around zero before the report. FXStreet put the half-point probability at 12.7%. Stocks fell after the release and Treasury yields jumped.
“This was the report the market could least afford to see,” said Karen Manna, fixed income investment strategist at Federated Hermes. She said a hotter inflation print raises fresh questions about whether the Fed has done enough to contain price pressures and reinforces the risk that interest rates need to move higher and stay there for longer.
For forex beginners, the link matters because gold pays no interest. Higher rates make interest-bearing assets such as US government bonds more attractive by comparison, which typically weighs on the metal, as FXStreet noted. Gold is also priced in dollars as XAU/USD, so a stronger dollar tends to keep its price in check while a weaker dollar tends to lift it. The same logic can spill into dollar pairs and commodity currencies, though the sources here do not quantify any such moves.
StoneX Senior Market Strategist Bob Haberkorn summed up the market reaction: “CPI came out a little hotter than expected, and the market is interpreting that it warrants higher rates at the December meeting.”
What Traders Are Watching Next
Attention now turns to the US Producer Price Index (PPI) for October, due on Friday. PPI tracks prices received by businesses and can offer an early signal on where consumer inflation is heading. FXStreet said a hotter-than-expected PPI reading could exert further selling pressure on gold in the near term.
The broader backdrop is mixed. Deutsche Bank analysts noted that credit was fairly flat on both sides of the Atlantic, but a risk-off tone in equities made it a good week for gold, which rose 5.06% over the week, its best since August, though it was down 0.42% on Friday. They said the risk-off tone from an AI-related selloff helped bring down sovereign bond yields around the world, while the 10-year US Treasury yield was up 1 basis point at 4.87% and Brent crude was down around 1% at the time of writing.
On the charts, FXStreet said XAU/USD remained below its 20-day Bollinger simple moving average and its 100-day simple moving average, a combination it described as reinforcing a bearish near-term bias. The 14-day Relative Strength Index stood at 43, below the midline, pointing to subdued but not oversold momentum. It placed initial resistance around $4,055 at the Bollinger middle band, then $4,200 at the 100-day average and $4,215 at the upper band, with notable support near $3,895 at the lower band. The report noted that its technical analysis was prepared with the help of an AI tool.
Consumer spending has held up so far, with retail sales up 0.8% in September according to the Commerce Department. Businesses, however, appear to be planning further increases: a net 37% of respondents to the October National Federation of Independent Business survey said they intend to raise prices in the next three months, the highest share since July 2022.
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