US Consumer Inflation Rose to 3.7 Percent in September
Following the inflation data that exceeded expectations, expectations that the Fed might raise interest rates strengthened in the markets, and ounce gold prices declined.
Consumer inflation in the United States rose to 3.7 percent annually in September, exceeding expectations. Following the released data, selling pressure was observed in precious metals, and significant drops occurred in gold prices.
Inflation Exceeded Expectations
Consumer inflation in the United States rose to 3.7 percent annually in September. This realized rate showed that the US Central Bank Fed's target of 2 percent continues to remain above.
Decline in Gold Prices
Following the inflation data coming in above expectations, selling pressure on precious metals increased. The ounce price of gold experienced a 1.7 percent drop, retreating down to 4,080 dollars.
Gram gold, which was trading at around 6,620 liras just before the release of the data, retreated down to 6,480 liras with the drop experienced following the announcement.
Fed Interest Rate Policy Expectations
The high course of oil prices at the 105-dollar level increases inflation concerns and strengthens the likelihood of the US Central Bank Fed raising interest rates.
Markets generally expect the Fed to keep interest rates steady in October, but go for another rate hike in December.
Interest Rate Hike and Its Impact on Gold
The strengthening likelihood of a rate hike causes gold assets, which do not offer any interest yield, to experience a loss in value. Investors are closely monitoring the developments.