What to Know
- Core consumer prices, excluding food and energy, rose 0.3 percent in October, above the 0.2 percent expected by economists polled by Reuters.
- The latest core CPI reading marked the third consecutive 0.3 percent increase.
- Overall consumer prices rose 0.4 percent, compared with expectations for 0.3 percent, after a 0.6 percent increase in September.
- The BLS did not publish the annual inflation rate because last year’s government shutdown prevented the collection of price data in October 2025.
- Food prices rose 0.5 percent, while energy prices increased 0.7 percent.
- Brent fell 5.85 percent to $92.57 on Monday, its lowest level since August 31, but the drop in oil did not prevent rate-hike expectations from rising.
- The odds of a December rate hike moved from about 81 percent on Monday morning to about 84 percent this morning, then close to 100 percent after the CPI update, based on CME FedWatch figures cited by Reuters.
- Fed Governor Waller said that hiking only 25 basis points would put credibility at risk.
- The USD Index futures fell to 101.38 early today before reversing and climbing to 102.36 after the CPI report.
- December gold futures traded near $4,036 after sliding to $4,033, slightly below Friday’s low, while December silver futures fell as low as $51.28.
Gold Comes Under Pressure as Core Inflation Stays Firm
Gold moved lower after a stronger than expected core inflation reading shifted attention back to the Federal Reserve’s policy path. December gold futures traded near $4,036 after sliding to $4,033, a move that placed the contract slightly below Friday’s low. The decline reflected a familiar pressure point for bullion: when inflation data pushes traders toward higher expected interest rates, the appeal of a non-yielding asset can weaken quickly.
The key figure for gold was not the headline inflation number, but the core measure that excludes food and energy. Core consumer prices rose 0.3 percent in October, compared with the 0.2 percent increase expected by economists polled by Reuters, according to the BLS. That was the third 0.3 percent increase in a row, a pattern that suggests underlying price pressure remained stubborn even as some volatile categories moved in different directions.
Overall consumer prices rose 0.4 percent, compared with expectations for 0.3 percent, after a 0.6 percent increase in September. The headline figure slowed from the prior month, but the slowdown was not as large as economists had anticipated. Food prices rose 0.5 percent and energy prices rose 0.7 percent, keeping the headline inflation backdrop firm enough to complicate the market’s hopes for easier monetary conditions.
Why the Core Reading Matters More for Bullion
For gold traders, the core number often carries more weight than the headline figure because it is closer to what policymakers monitor when assessing persistent inflation. Food and energy prices can move sharply from month to month, which makes them important for households but less reliable as a signal of the longer-term inflation trend. Core prices, along with wages, are commonly viewed as better indicators of whether inflation pressure is becoming embedded in the economy.
That distinction was central to the gold market’s reaction. A softer energy backdrop might normally be treated as helpful for inflation-sensitive assets, but the stronger core CPI reading worked in the opposite direction. It signaled that even if some energy-related pressure eases, the Federal Reserve may still have reason to keep policy tight. Gold, which does not pay interest, tends to struggle when investors believe cash and short-duration bonds may offer more attractive returns.
The BLS did not publish the annual inflation rate this time because last year’s government shutdown prevented the collection of price data in October 2025. That left monthly figures at the center of market interpretation. With core prices again rising 0.3 percent, traders focused on the repeated monthly pace rather than an annual comparison.
Oil’s Sharp Drop Was Not Enough to Support Gold
Oil prices moved sharply lower before the CPI release, but that decline did not deliver sustained relief for gold. Brent fell 5.85 percent to $92.57 on Monday, reaching its lowest level since August 31, after President Trump said that “Iran militarily is effectively over.” Cheaper oil can ease inflation expectations, because energy costs flow through transport, production, and household budgets. In this case, however, the market looked beyond oil and concentrated on core inflation and wage data.
Based on the CME FedWatch tool, the odds of a December rate hike were about 81 percent on Monday morning and about 84 percent this morning, according to Reuters. After the CPI report, those odds were described as close to 100 percent. That shift illustrates how quickly the rate outlook can change when inflation readings challenge hopes that price pressure is cooling fast enough for the Federal Reserve to soften its stance.
Wage data added to the same concern. Friday’s jobs report showed that average hourly earnings rose 0.4 percent in October. Wage growth matters because it can support household demand and contribute to services inflation, making it harder for central banks to declare victory over price pressure. In the bond market, the 2-year Treasury yield rose about 4 basis points on Monday, even as oil slid, underscoring that traders were still pricing a firmer policy path.
Fed Commentary Adds to Hawkish Market Tone
Federal Reserve communication also reinforced the pressure on gold. Fed Governor Waller said earlier today: “Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.” The comment was notable because it framed a smaller hike as potentially insufficient to defend the central bank’s anti-inflation credibility. For gold, that kind of messaging can be difficult because it supports the idea that policymakers may remain aggressive if inflation does not cool convincingly.
Market participants often assess gold through the lens of real and expected interest rates. When investors think the Fed may raise rates, or keep rates elevated, the opportunity cost of holding bullion increases. Gold can still attract safe-haven demand during periods of stress, but in sessions dominated by inflation and rate repricing, the metal is frequently more sensitive to yields and the dollar.
The latest CPI figures therefore arrived at an important moment. Monday’s oil decline gave bullion a possible macro tailwind, but the stronger core reading and hawkish policy backdrop quickly offset that support. The result was a renewed slide below Friday’s low and a broader sense among technical traders that the rebound in gold may be losing momentum.
Dollar Rebound Deepens the Pressure
The dollar’s reaction added another layer of pressure. Early today, USD Index futures fell to 101.38, a level aligned with their previous yearly highs, before reversing. After the CPI report, the USD Index climbed to 102.36, reaching Friday’s high. That move mattered for gold because bullion is priced in dollars, and a stronger dollar can make the metal more expensive for buyers using other currencies.
The dollar often gains when U.S. rate expectations rise. Higher expected interest rates can attract capital toward dollar-denominated assets, especially when traders believe the Federal Reserve will remain more restrictive. In this session, the combination of a hot core CPI print and a stronger USD Index created a difficult environment for gold bulls.
Technical traders were also watching the way gold has moved since the August top. Some chart watchers argue that the metal has been declining in a steady back-and-forth pattern and that the current rebound may resemble a final corrective phase rather than the start of a durable advance. That view remains a market interpretation rather than a settled outcome, but the break below Friday’s low gave bearish traders fresh material to work with.
Silver Follows Gold Lower
Silver also weakened after the inflation release. Early today, silver showed more relative strength than gold, but that strength faded as the market digested the CPI data and rate implications. December silver futures slid as low as $51.28. The move showed that the pressure was not confined to gold alone, as precious metals broadly reacted to the stronger dollar and higher expected rates.
Silver can sometimes behave differently from gold because it has both precious-metal and industrial characteristics. During risk-on periods, industrial demand expectations may support silver, while during monetary tightening episodes, the metal can still be pulled lower by rising yields and a firmer dollar. The latest session leaned toward the latter dynamic, with silver’s earlier resilience giving way after the inflation surprise.
Some market participants view silver strength during a rebound as a possible sign of a corrective upswing rather than confirmation of a new sustained rally. That interpretation is especially common when gold itself is struggling near key levels. In the current setup, the broader precious-metals complex remains closely tied to the Fed outlook and the dollar’s next move.
Technical Focus Shifts to Downside Risk
With core CPI coming in hotter than expected, the USD Index rebounding from support, and gold sliding under Friday’s low, downside scenarios have gained attention. Some technical traders continue to discuss the possibility that gold could move toward about $3,500 if the current pattern extends. That target is a forecast-based level, not a certainty, and it depends on whether the dollar and rate expectations continue to move against bullion.
The comparison some chart watchers make is to the market structure seen in 2013, when a rebound preceded a sharper slide. The current pattern has been described by some participants as similar to the rebound of February and March 2013, which came before gold’s April 2013 crash. Historical comparisons can be useful for framing risk, but they are not guarantees. Market structure, policy conditions, positioning, and macro data can all change the outcome.
For now, the practical takeaway is that gold remains vulnerable when inflation data strengthens expectations for tighter monetary policy. Cheaper oil offered bullion only limited support because the Fed’s focus remains more centered on core prices and wages. Unless upcoming data changes the rate narrative, the dollar and yields may continue to act as major obstacles for a sustained gold recovery.
What Traders Are Watching Next
Gold traders are now watching whether the metal can reclaim the area around Friday’s low or whether the latest break develops into a deeper decline. The dollar’s behavior near 102.36 is also important because that level marked Friday’s high and became a focal point after the CPI-driven rally. A continued dollar advance would likely keep pressure on bullion, while a reversal could give gold room to stabilize.
The Fed outlook remains the central driver. With the perceived odds of a December hike moving close to 100 percent after the CPI update, the market has less room to price in a dovish surprise unless future data softens meaningfully. Gold does not need lower rates to rally in every environment, but it typically benefits when real yields decline, the dollar weakens, or investors seek protection from financial stress.
At this stage, the core inflation surprise has taken control of the narrative. Brent’s slide helped ease one part of the inflation picture, but it did not change the message from core prices, wages, Fed commentary, and short-term yields. For bullion, that leaves the market facing a difficult combination: stronger policy expectations, a firmer dollar, and a technical break below a recent low.
Frequently Asked Questions (FAQs)
Why did gold fall after the CPI report?
Gold fell because core consumer prices rose 0.3 percent in October, above the 0.2 percent expected by economists polled by Reuters. The stronger reading lifted expectations for a December rate hike and supported the dollar, both of which can pressure gold.
What was the latest price action in December gold futures?
December gold futures traded near $4,036 after sliding to $4,033, slightly below Friday’s low. That move signaled renewed weakness as traders reacted to the inflation data and the stronger dollar.
Why is core CPI important for gold?
Core CPI excludes food and energy, which can be volatile. Because Federal Reserve officials often focus on core prices and wages to judge persistent inflation pressure, a hot core reading can increase expectations for tighter monetary policy and weigh on gold.
Did lower oil prices help gold?
Lower oil prices provided only limited support. Brent fell 5.85 percent to $92.57 on Monday, but rate-hike expectations still rose because traders focused on core inflation, wage growth, and Federal Reserve commentary.
What happened to the dollar after the CPI release?
USD Index futures fell to 101.38 early today before reversing. After the CPI report, the USD Index climbed to 102.36, reaching Friday’s high and adding pressure to gold.
How did rate-hike expectations change?
Based on CME FedWatch figures cited by Reuters, the odds of a December rate hike were about 81 percent on Monday morning and about 84 percent this morning. After the CPI update, those odds were described as close to 100 percent.
What role did Fed Governor Waller’s comments play?
Fed Governor Waller said that hiking only 25 basis points would put credibility at risk. The comment reinforced the market’s perception that the Federal Reserve may remain hawkish if inflation pressure persists.
How did silver react?
Silver followed gold lower after initially showing relative strength. December silver futures slid as low as $51.28 as the stronger dollar and higher expected rates weighed on precious metals.
Could gold fall toward $3,500?
Some technical traders see downside risk toward about $3,500 if the current bearish pattern continues. That is a market forecast, not a guaranteed outcome, and it depends on the dollar, rate expectations, and future inflation data.