Hotter inflation is supposed to be gold's moment. This week it is the dollar's.
The metal fell for a third straight session on Thursday and touched its lowest level since Nov. 4 as the dollar climbed to a 19-month high following Tuesday's consumer price report, which came in stronger than economists expected.
Gold futures settled Thursday at $3,878.40 per ounce, down 2.85% from Wednesday, according to Dow Jones Market Data.
The repricing in rates has been fast. Traders now see an 89% chance of a quarter-point hike in December, according to CME's FedWatch tool, and the odds of a half-point move rose to 11% from zero before the inflation data. October's inflation jump has its own explainer.
The labor market has stayed firm. October job growth accelerated, and the unemployment rate fell to 4.1%, keeping the central bank on track to raise rates at its December meeting.
Bullion pays no interest, so higher rates raise the cost of holding it, and a stronger dollar makes it more expensive for buyers paying in other currencies. The pattern of gold trading like a risk asset has its own history.
The slide started Tuesday
Tuesday's report did the damage. Bullion slid in the session that followed, then edged higher on Wednesday as traders booked profits on the move, before sellers returned on Thursday. The dollar index edged up 0.02% to 102.27 during Wednesday's session.
Gold Steadied On Wednesday After Tuesday's Slide
Spot gold, USD per ounce, Nov. 10 to Nov. 11, 2026
Bar chart. USD per ounce. Nov 10: Gold Price $4K. Nov 11: Gold Price $4K.
Source: New Straits Times/Reuters
What officials are saying
Two Fed officials went further than the quarter-point move markets expected. Dallas Fed President Lorie Logan said the central bank may need to raise rates by at least another 50 basis points, and Governor Christopher Waller floated a half-point increase at the December meeting.
Fed Vice Chair for Supervision Michelle Bowman said bringing inflation down remains the central bank's top priority, and Philadelphia Fed President Anna Paulson said more rate increases are ahead.
The tightening is not confined to Washington. The Bank of Japan is expected to raise rates in December and keep lifting borrowing costs next year toward 2%, according to former BOJ chief economist Seisaku Kameda.
What Wall Street is watching next
StoneX senior market analyst Matt Simpson put Wednesday's move down to positioning rather than conviction.
ANZ analyst Soni Kumari said the near-term macro backdrop for bullion is not encouraging, though Middle East developments could still support the metal through inflation.
Saxo Bank's Ole Hansen said the recent sharp decline in energy prices may help ease inflation pressures in the months ahead.
Friday's US producer inflation data is the next checkpoint for the rate outlook, and by extension for gold. A second hot print would hand the hawks more ammunition heading into the December meeting.
