Gold Below $4,000: Rate-Hike Bets After Hot CPI
Gold falls below $4,000 an ounce. Hot inflation data lifts bets on a December Fed rate hike. Key analyst levels explained.
Key Takeaways
- Gold slips below $4,000 an ounce, with spot last at about $3,983.
- Hot US inflation data strengthens bets on a Fed rate hike in December.
- Analysts disagree: a retest of $3,900, or a floor at $4,000.
The $4,000 mark held for two weeks, and now it is giving way. After Tuesday's inflation report, gold first lost about 2 percent; on Wednesday, according to Kitco, spot gold fell as far as roughly $3,983 an ounce (down 1.2 percent). The dollar is gaining, and rate expectations are rising.
An inflation report tips the two-week floor
The trigger is the US consumer price index for October. Headline inflation rose 0.4 percent month over month, against expectations of 0.3 percent. Core inflation increased 0.3 percent, where economists had expected 0.2 percent. The previous Friday also brought a strong jobs report, with 165,000 new positions and an unemployment rate of 4.1 percent.
That combination is awkward for gold. The dollar index climbed about 0.7 percent toward 102.90, according to Kitco, close to its highest level since April 2025. The yield on 10-year US Treasuries briefly topped 5 percent on Tuesday. For anyone holding gold instead of an interest-bearing asset, waiting now costs more.
In futures markets, a hike at the Fed meeting on December 8-9 is now treated as nearly certain. Kitco puts the probability of a 25-basis-point move at 87.1 percent and of a larger 50-basis-point step at 12.9 percent.
Two banks, two readings of the $4,000 line
Analysts draw different conclusions from the same data. Bark Melek, commodity strategist at TD Securities, expects a slide back to around $3,900. Higher rates and the stronger dollar weigh on investment demand, he argues. Central bank purchases, which TD puts at 675 tonnes so far this year (up 6 percent), may not be enough to offset that. For now, the bank sees gold trading in a range between $3,900 and $4,200.
Suki Cooper of Standard Chartered argues the opposite: that $4,000 is becoming a floor. Gold-backed exchange-traded products drew 211 tonnes in the third quarter, the most since 2024, and added another 19 tonnes in October. Central banks bought 321 tonnes in the third quarter, well above the estimate of 200 tonnes. Her base case is a single 25-basis-point hike in December and then a pause. For the fourth quarter she expects an average of $4,650.
As Kitco reports, safe-haven demand is also fading as US-Iran talks make progress. At the same time, the unresolved situation in the Strait of Hormuz keeps oil prices high, which in turn feeds inflation worries.
What momentum says
Our snapshot from Thursday morning shows gold at $3,954. The momentum signals a bearish state on the 1-hour, 4-hour and weekly timeframes. On the daily timeframe it stands at neutral. The short-term trend is therefore clearly pointing down, while the daily chart has not yet committed.
Scenarios
If gold falls decisively below the $3,942 to $4,000 zone, Fawad Razaqzada of FOREX.com names the recent low near $3,870 as the first target, followed by $3,738.
If, on the other hand, it breaks above the resistance area of $4,106 to $4,140, the same analyst sees $4,300 coming into view.
The next tests arrive quickly: weekly jobless claims are due Thursday, and October producer prices on Friday. According to Kitco, softer producer prices could ease pressure on gold, while another upside surprise would reinforce the rate-hike bets.