Gold falls as hot inflation figures, higher dollar weigh

Spot gold was down 1.1 per cent at US$3,986.79 per ounce by 1.51 pm ET (1851 GMT), extending Tuesday's almost 3 per cent fall after recovering to as high as US$4,066.77 earlier in the session. US gold futures for December delivery settled 0.7 per cent lower at US$4,000.50 per ounce.

"CPI came out a little hotter than expected, and the market is interpreting that it warrants higher rates at the December meeting," said Bob Haberkorn, senior market strategist at StoneX.

Gold fell about 3 per cent on Tuesday after data showed US consumer prices rose a larger-than-expected 0.4 per cent in October. Economists polled by Reuters had forecast a 0.3 per cent rise.

Ahead of the data, Fed Governor Christopher Waller said a core inflation reading of 0.3 per cent in October would prompt him to consider a half-point hike at the December meeting.

While markets priced in an 87 per cent chance of a 25-basis-point rate hike in December, bets on a 50 bp increase rose to 12.9 per cent from zero before the CPI reading, boosting the dollar index to its highest level since April 2025.

A stronger dollar makes bullion more expensive for overseas buyers, while the non-yielding metal also becomes less attractive in a high-interest-rate environment.

Haberkorn, however, pointed to strong purchases by top bullion consumer China and other central banks.

"That's really kept the floor on gold despite the short-term fundamental news, which is the Fed and interest rates working against it."

Spot palladium was up 1.8 per cent at US$1,043.00 per ounce after hitting its highest level since October 22.

Still, Deutsche Bank analysts said the palladium market may have reached the point where autocatalyst demand erosion intersects with recovering secondary supply, turning a decade of scarcity into a persistent surplus.