Gold prices extended their decline for a third straight session on Thursday, with December COMEX futures dropping 1.6% to $3,936.40 an ounce by 09:03 GMT, down from Wednesday's settlement of $4,000.50. The slide pushed the metal below the psychologically important $4,000 level, and spot bullion was trading at $3,934.40 shortly after, having touched an intraday low of $3,929.50.
The sell-off was driven by a surging US dollar, which reached a 19-month high of 103.08 on Thursday, and by renewed inflation concerns following Tuesday's hotter-than-expected consumer price index report. October CPI rose 0.4% against forecasts of 0.3%, while core inflation advanced 0.3%, exceeding expectations of 0.2%. A stronger dollar makes gold more expensive for foreign buyers, and higher Treasury yields diminish the appeal of the non-yielding metal.
Fed rate hike expectations intensify
Market participants are now pricing in roughly an 89% probability of a quarter-point rate increase at the Federal Reserve's December meeting, with an 11% chance of a larger move. ANZ analysts noted that persistent inflation and signs of economic resilience could prompt the Fed to consider a half-point hike, though that remains a risk scenario rather than the central expectation.
Chicago Fed President Austan Goolsbee called October's inflation report troubling, particularly because services inflation has yet to ease convincingly. His remarks added to the hawkish tone, supporting the dollar's safe-haven appeal even as geopolitical tensions in the Middle East persist.
Technical levels and outlook
FXStreet identified $3,930 as a crucial technical retracement level. A sustained break below that could bring $3,870 into focus, while a recovery above $4,009 would signal easing selling pressure. Attention now turns to Friday's Producer Price Index report, scheduled for 13:30 GMT, ahead of the Fed's December 8-9 meeting. A higher-than-expected reading could reinforce rate hike bets, while softer numbers might offer gold some respite.
Despite the short-term weakness, some analysts maintain a constructive medium-term outlook. OCBC strategists Sim Moh Siong and Christopher Wong cited central-bank buying and investment demand as potential support once the interest-rate environment improves. For investors considering gold exposure, the distinction between physical bullion and leveraged futures is particularly important during sharp price swings.
This article is for informational purposes only and does not constitute financial advice.
