Gold falls below $4,000 as Fed rate hike bets grow
Gold price (XAU/USD) tumbles to near $3,985 during the early Asian session on Thursday. The precious metal extends its downside as persistent inflation forces the US Federal Reserve (Fed) to maintain its tightening policy.
Gold prices dropped below $4,000 amid increasing speculation of Federal Reserve rate hikes. The US inflation data for October showed a 0.4% increase in the Consumer Price Index (CPI) compared to the expected 0.3%. This data reinforced expectations of a rate increase at the December meeting, as reported by StoneX Senior Market Strategist Bob Haberkorn.
The Fed's hawkish tone, as conveyed by Governor Christopher Waller, added fuel to the belief that higher rates would make interest-bearing assets more appealing. The probability of a 50-basis-point hike rose to 12.7%, up from 0% before the data. Analysts noted that the risk-off tone in equities and falling sovereign bond yields contributed to gold's decline.
The 10-year US Treasury yield increased to 4.87%. Despite the mixed cross-asset backdrop, the bullish outlook for gold remained, as it is seen as a safe-haven asset during turbulent times.
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