Gold falls 1.1% to $4,094.90 as traders bet on December U.S. rate hike
Key Facts
Spot gold fell 1.1% to $4,094.90 an ounce on Thursday morning, October 22, as oil rose and traders continued to favor a U.S. interest rate hike in December, according to Reuters. The metal reached that level at 03:33 GMT, retreating after gains in the previous session. U.S. gold futures for December delivery also fell 0.9% to $4,111.40 an ounce, according to the agency's Thursday morning update. Spot gold had ended Wednesday trading up 0.4% at $4,141.28 an ounce, according to Investing.com. In interest rate markets, Reuters cited CME Group's rate expectations tracking tool as showing traders pricing in a 90% chance of a December hike. The probability of a hike at the October meeting stood at 16%, reflecting differing bets on the next two meetings.
Reuters linked Thursday's rise in oil prices to additional Houthi attacks in Saudi Arabia, which prompted the United States to order some diplomats and their family members to leave its missions in the kingdom. Oil's advance followed Wednesday's session, when Brent crude rose 1.1% to settle at $109.96 a barrel, according to Investing.com. In the United States, gasoline prices had posted a seasonally adjusted monthly increase of 9.1% in September, according to the U.S. Bureau of Labor Statistics. The bureau said gasoline accounted for more than half of the monthly increase in the consumer price index that month. The headline index rose 0.6% on a seasonally adjusted monthly basis, compared with a 0.4% increase in August, marking an acceleration in consumer price gains between the two months. On an annual basis, without seasonal adjustment, U.S. inflation stood at 3.7% in September.
By contrast, the monthly increase in the core consumer price index, which excludes food and energy, held steady at 0.3% in September, according to the Bureau of Labor Statistics. The seasonally adjusted monthly increase in the core index had been the same in August, while the increase in the headline index accelerated. Core prices rose 2.6% in September on an annual basis without seasonal adjustment. On economic activity, the Federal Reserve said U.S. industrial production increased 0.7% in September, after rising 0.1% in August. The comparison between the two months showed industrial production growth accelerating alongside faster monthly consumer price gains and a steady pace of core inflation.
The Federal Reserve had raised its target interest rate range by a quarter of a percentage point at its September meeting to 3.75%–4%, according to its official statement. The central bank said in the statement that "inflation remains elevated," setting out its assessment of price pressures at the previous meeting. The Federal Open Market Committee's statement was approved unanimously in a vote of 12 to zero. In the economic projections released at the same meeting, the median of Fed officials' forecasts for the midpoint of the interest rate range at the end of 2026 stood at 4.1%. The median also remained at 4.1% for the end of 2027, according to the official projections table, leaving officials' estimates for the end of this year and next year at the same level.
Ahead of the next meeting, 94 out of 100 economists expected interest rates to remain unchanged in October, according to Investing.com's account of a Reuters poll. By contrast, all economists surveyed expected a rate hike in December, marking differing expectations for the decisions at the two meetings. The Federal Open Market Committee meets on October 27 and 28, according to the Federal Reserve's official calendar. The meeting's conclusion will be followed by the release of the U.S. personal income and outlays report for September on October 29, 2026, according to the Bureau of Economic Analysis calendar. The bureau scheduled the report's release for 8:30 a.m., the day after the committee's meeting ends. The Fed will then meet on December 8 and 9, accompanied by the release of new economic projections.