Gold fell to a more-than-one-year low around $3,880 an ounce in the early Asian session on Friday, pressured by persistent US inflation concerns and expectations of higher interest rates ahead of the US October producer price index report. The metal was on track to give back part of a strong previous week, when it rose 5.06 percent, its best week since August.
US President Donald Trump said on Thursday that the United States did not need a deal with Iran, dashing hopes of an agreement to end the conflict, and oil prices jumped on the news. Stronger-than-expected US consumer price data earlier in the week reinforced expectations of a Federal Reserve rate hike in December. Markets moved from zero to a 14.5 percent chance of a 50-basis-point hike after Tuesday’s inflation report.
Rate expectations keep pressure on bullion
Fed Governor Christopher Waller said a 50-basis-point hike should be considered if core inflation remains elevated, while the 10-year Treasury yield stood at 4.87 percent. Higher yields raise the opportunity cost of holding non-interest-bearing assets such as gold.
David Meger, director of metals trading at High Ridge Futures, said higher energy prices continued to warrant a hawkish Fed. “A hawkish Fed is an environment of higher interest rates and hence a headwind for the yellow metal,” he said.
By our market data, gold stood at $3,883.68 an ounce as of 00:06 GMT on 13 November, near its 30-day low. Expected US producer prices for October were projected to rise 6.6 percent from a year earlier, with core prices up 5.0 percent.
Technical levels in focus
Deutsche Bank noted that risk-off equity sentiment and an AI-related selloff helped push sovereign bond yields lower globally in the same week gold rallied.
Related: Gold Holds Near 31-Day Low as Speculative Longs Shrink
Data: Swissquote
