NEW YORK, United States / ConSynSer / – Gold steadied on Wednesday, recovering part of the nearly 3% loss suffered in the previous session. The recovery was capped by hotter-than-expected US inflation figures, which have firmed expectations of a Federal Reserve rate increase next month. Spot gold rose 0.3% to $4,043.62 an ounce as of 03:03 GMT. On Tuesday, the precious metal had dropped almost 3% to $4,017.21. Investors are now assessing how aggressively the US central bank could move against rising prices.
December-delivery US gold futures advanced 0.5% to $4,051.10. Other precious metals outpaced gold in early Asian trading. Spot silver gained 1.7% to $52.38 an ounce, and palladium firmed 1.3% to $1,038.38. Tuesday’s decline came as the US dollar strengthened and short-dated Treasury yields climbed. Rising interest rates increase the opportunity cost of holding bullion, which offers no yield. A firmer dollar also makes gold dearer for investors using other currencies.
Data released on Tuesday showed US consumer prices rose 0.4% in October. Economists had forecast a 0.3% gain. Core prices, which strip out food and energy, increased 0.3%, with shelter the biggest driver of the monthly rise. Following the release, the CME FedWatch tool showed traders pricing a 100% chance of a rate increase in December. Before the figures, that probability stood at 84%. Wagers on a bigger half-point hike also climbed.
Policymakers keep a hawkish tone on inflation
Comments from Fed officials added to the pressure on bullion. Michelle Bowman, the Fed’s Vice Chair for Supervision, said on Tuesday that lowering inflation remains the central bank’s top priority. Anna Paulson, President of the Philadelphia Fed, said more gradual rate rises were needed to bring elevated inflation down. Fed Governor Christopher Waller floated a larger-than-usual 50 basis point move in December. Dallas Fed President Lorie Logan said rates eventually need to climb by at least another half point.
In September, the Fed lifted rates for the first time in three years as inflation proved persistent. Policymakers hold their last meeting of the year on December 8 and 9. Gold has often traded on changes in yields and Fed expectations this year, including an August rebound as Treasury yields fell. Higher borrowing costs tend to reduce the appeal of assets that pay no interest. Traders are also watching the dollar after its post-data gains.
Profit-taking drives a modest recovery
Matt Simpson, a senior market analyst at StoneX, said Wednesday’s rise reflected a technical retracement following heavy losses. Simpson said bears were taking profits after Tuesday’s sharp fall. The hot consumer price data and hawkish remarks from Fed officials had revived expectations of tighter policy, Simpson said. ANZ analyst Soni Kumari said favourable developments in the Middle East could lend gold some support from an inflation perspective. Kumari added that the near-term macro backdrop for gold did not appear positive.
ING analysts said central bank purchases and robust physical demand in Asia had helped gold hold near $4,000 an ounce. They said doubts about the Fed’s next step could keep prices volatile in the near term. The metal built on its gains later in the day, rising 0.6% to $4,057.33 by 06:37 GMT. The tightening cycle contrasts with September 2025, when a Fed rate cut sent spot gold to fresh highs above $3,750. Spot silver later rose 2.9% to $53.01.