Gold falls 1.6% to $4,071.07 as Waller pushes December rate hike
Gold lost more than 1% on Tuesday after a Federal Reserve governor argued for higher interest rates, turning traders' attention to US inflation figures due later in the day.
Spot gold fell 1.6% to $4,071.07 an ounce by 1153 GMT, while US gold futures for December delivery slipped 0.9% to $4,079.80. Fed Governor Christopher Waller said the central bank should raise short-term borrowing costs next month even if government data shows inflation cooled last month, and should consider an upsized half-point hike if the inflation picture worsens. Short-dated Treasury yields jumped in London trade after his remarks, and traders priced about a 99% probability of a December increase, according to CME's FedWatch tool.
"There is a bitter turnaround on the rate and dollar side. Rates are not falling anymore as before," said Giovanni Staunovo, an analyst at UBS. Higher rates tend to reduce the appeal of non-yielding bullion, even though gold is typically seen as an inflation hedge.
The next test is US consumer price data at 1330 GMT, followed by producer price figures on Friday. Economists polled expect core CPI, which excludes food and energy, to have risen a moderate 0.2% last month from September. "If we get something hotter than 0.3%, that could once again add some of that pressure on rate hike fears. So that could be gold negative, a number below or at 0.3% will remain supportive for gold," said Nitesh Shah, commodity strategist at WisdomTree.
Other metals moved with gold: spot silver slipped 2.1% to $52.27 an ounce and palladium dropped 1.3% to $1,027.97.
