Latest. The afternoon brought two more hawkish voices behind the December pricing. San Francisco Fed President Mary Daly, in a keynote at the Stanford Institute for Economic Policy Research, said there is no doubt AI has fuelled price pressure, that inflation is bleeding into services, where it turns sticky, and that the prevailing bias is that further tightening will be needed, adding that she was comfortable with the September hike and that inflation pressure is up, not down. Chicago Fed President Austan Goolsbee, in a Yahoo Finance interview the same day, said inflation has been well above target, that Tuesday’s consumer price report was not a one-off, and that the Fed is inching into a historically tough spot and failing on the inflation side of its mandate. Neither named a December move, but both framed AI investment itself as a source of demand pressure, the argument now carrying the hike pricing that is weighing on gold.
Spot gold was down 0.4 percent at 3971.04 dollars an ounce as of 1:42 p.m. in Singapore on Thursday, holding below 4000 dollars after a drop of more than 1 percent in the previous session, Bloomberg reported. Silver fell 0.8 percent to 51.28 dollars, while platinum and palladium edged higher. By midday the site market tables had futures lower still: gold at 3876.3 dollars, down 3.10 percent on the day and 5.77 percent on the week, and silver at 49.97 dollars, down 3.69 percent.
The driver is the repricing that followed October’s consumer price report. Inflation came in hot for a second look, Chicago Fed President Austan Goolsbee called the October report borderline disturbing, and traders now fully price a quarter point hike at the December 8 to 9 meeting, with some seeing a chance of a half point move. Two year Treasury yields have surged 25 basis points this week and a gauge of the dollar jumped almost 1 percent over Tuesday and Wednesday, a combination that raises the cost of holding a metal that pays no interest.
The break matters because of what held yesterday. On Tuesday gold fell 2.03 percent on the inflation print and still closed the argument above 4000 dollars, which strategists read as structural demand absorbing the shock. That cushion has now thinned. OCBC strategist Christopher Wong said the metal faces more downside risk in a less favourable macro environment, potentially toward 3870 dollars an ounce, and warned that an upside surprise in Friday’s producer price index risks extending the pullback.
Positioning colour points the same way. Gold has been unable to sustain its brief rebound above 4100 dollars late last month, and Global X ETFs strategist Justin Lin said the near term outlook is poor, with the reviving AI trade making gold a harder hold against competing assets. None of that changes the longer bid from central banks, but the marginal buyer this week is the rates market, and the rates market is moving against the metal.
The next tests are close together: remarks from Fed governor Michael Barr and other officials on Thursday, then the October PPI on Friday, November 13. A soft PPI is the clearest route back above 4000 dollars. Another hot print, with the 10 year Treasury yield already at 5.11 percent in the site tables, opens the 3870 dollar zone Wong flagged.