Gold Falls Below $4,000 as Strong US Inflation Lifts Dollar

Key Takeaways

-Gold declined nearly 4% across Tuesday and Wednesday, breaking below the psychological $4,000 level.
-October US CPI rose 0.4% month-on-month, exceeding the 0.3% market forecast.
-The US dollar climbed to its highest level since April 2025, adding pressure on gold.
-Markets priced in an 87% probability of a 25-basis-point Fed rate hike in December as of 11 November.
-Immediate support sits at $3,968.70, followed by $3,950, while resistance remains between $4,000 and $4,050.

Gold remained under pressure on Thursday after extending its losses for a second consecutive session. The decline pushed XAUUSD below the psychological $4,000 level as stronger-than-expected US inflation reinforced expectations of tighter Federal Reserve policy.

October's Consumer Price Index (CPI) rose 0.4% month-on-month, exceeding the 0.3% forecast and suggesting that inflationary pressures remain persistent.

The stronger reading lifted the US dollar to its highest level since April 2025, making dollar-denominated gold more expensive for international buyers. Meanwhile, rising expectations of a December rate increase added further pressure on the precious metal.

Why Traders Are Watching Gold

The immediate focus is whether persistent inflation will prompt the Federal Reserve to maintain its hawkish stance or consider a larger rate increase in December. Markets were pricing in an 87% probability of a 25-basis-point hike as of 11 November, while the possibility of a 50-basis-point increase also remained in focus.

Federal Reserve Governor Christopher Waller had indicated support for a December rate hike and said he would consider a larger 50-basis-point increase if October core CPI reached 0.3%. The latest report showed core inflation rising by that amount, keeping the possibility of a larger move on the table.

Gold's direction also carries implications for other markets. A stronger dollar and rising Treasury yields could maintain pressure on precious metals, while easing rate expectations could support demand for gold.

Key factors influencing gold's outlook include:

-Federal Reserve Commentary: Whether policymakers maintain their hawkish stance ahead of the December meeting.
-US Treasury Yields: Whether yields continue rising and increase the opportunity cost of holding non-yielding gold.
-US Dollar Performance: Whether the dollar extends its recent strength or begins to retreat.
-Upcoming Economic Data: Whether inflation and employment figures reinforce expectations of further rate increases or give the Fed more room to pause.

Key Trading Levels

XAUUSD is trading around $3,971 after retreating from approximately $4,060. With prices below the psychological $4,000 threshold, the short-term structure remains under pressure. Immediate support sits at $3,968.70, with $3,950 marking the next downside reference.

A sustained break below $3,968.70 could extend selling pressure towards $3,950. However, a recovery above $4,000 would suggest buyers are regaining some control, bringing $4,050 into focus as the next resistance level.

Bottom Line

Gold's next move depends on whether incoming US economic data reinforces expectations of tighter monetary policy. Persistent inflation, rising Treasury yields and a stronger dollar could maintain downward pressure, while softer data or easing rate expectations could encourage a recovery.

For a closer look at gold's outlook and the inflation developments, read the full article in the "learn more" button below.