Gold, silver retreat as high core CPI lifts December Fed hike odds- Kitco AM Report

(Kitco NewsWire) – Spot gold and silver prices were sharply lower in early U.S. trading Tuesday, pressured by stronger-than-expected U.S. inflation data that reinforced expectations for another Federal Reserve interest rate increase in December. Both headline and core consumer prices rose more than economists had forecast in October, sending Treasury yields higher and adding to pressure on precious metals following Monday's rally. Spot gold was trading near $4,055.30 an ounce, down $84.10, or 2.03%, while spot silver was trading near $51.700, down $1.600, or 3.01%.The U.S. Labor Department reported Tuesday that the consumer price index increased a seasonally adjusted 0.4% in October, exceeding economists' expectations for a 0.3% gain but slowing from September's 0.6% increase. Core consumer prices, which exclude food and energy, rose 0.3%, also above forecasts for a 0.2% increase. Core inflation has now increased 0.3% in each of the past three months, indicating that underlying price pressures remain persistent despite the recent decline in crude oil prices.The Bureau of Labor Statistics did not publish annual inflation rates for October because the federal government shutdown prevented the collection of comparable consumer price data in October 2025. September's headline annual inflation rate was 3.7%, but a directly comparable October reading is unavailable. The absence of official annual figures makes the monthly components particularly important for assessing the inflation trend and the implications for Federal Reserve policy.The October CPI report showed that shelter costs increased 0.3%, accounting for more than 30% of the monthly rise in headline prices. Food prices rose 0.5%, including a 0.4% increase in grocery prices, while the energy index advanced 0.7% following September's 5.2% surge. Gasoline prices increased 1.0%, electricity costs rose 0.9% and natural gas prices declined 0.8%. Within the core index, recreation costs advanced 0.8%, motor vehicle insurance increased 0.7% and medical care prices rose 0.3%. Used vehicle prices declined 1.2%, providing some offset to increases elsewhere. The breadth of price pressures reinforces concerns that inflation remains embedded beyond the energy sector.The stronger-than-expected inflation figures added to expectations for further Federal Reserve tightening. Before Tuesday's release, futures markets assigned approximately an 84% probability to a 25-basis-point increase at the Fed's Dec. 8-9 meeting. Following the CPI report and hawkish comments from Federal Reserve Governor Christopher Waller, market assessments indicated that a quarter-point increase was almost fully priced in, with some probability also assigned to a larger move. The benchmark 10-year U.S. Treasury yield climbed toward 4.94%, while the two-year yield advanced toward 4.69%, reflecting renewed concern that monetary policy will remain restrictive. Higher yields and a firmer dollar weighed on gold by increasing the opportunity cost of holding non-yielding bullion.The CPI figures followed Friday's stronger-than-expected October employment report, which showed nonfarm payrolls increasing by 165,000, compared with expectations for approximately 65,000 additional jobs. The unemployment rate declined to 4.1% from 4.2%, while average hourly earnings increased 0.4% on the month. August and September payroll figures were revised upward by a combined 84,000 jobs. The combination of resilient hiring, stronger wage growth and persistent consumer inflation gives the Federal Reserve additional room to focus on price stability despite recent volatility in equity markets.Market positioning is now focused on whether the latest inflation figures will encourage investors to price in more than a conventional 25-basis-point December rate increase. Tuesday's rise in Treasury yields reversed part of the bond-market rally that followed last week's U.S. midterm elections, when Democratic victories in both chambers of Congress encouraged expectations for greater fiscal restraint and potentially lower government borrowing requirements. Those longer-term fiscal considerations remain relevant, but the immediate monetary policy outlook is being driven by stronger employment and inflation data. For gold, that combination presents a substantial near-term headwind, while silver faces additional pressure from its sensitivity to industrial activity and broader financial conditions.The next major U.S. inflation release is Friday's October producer price index, scheduled for 8:30 a.m. EST. Thursday's economic calendar includes weekly initial jobless claims and October existing home sales, while Federal Reserve officials are expected to provide additional commentary on the inflation outlook. Investors will also monitor Tuesday's $42 billion U.S. Treasury 10-year note auction for evidence of demand at higher yields. Treasury markets will be closed Wednesday for Veterans Day, although U.S. equity markets will remain open. Stronger producer prices or further hawkish Fed commentary could reinforce expectations for additional tightening, while evidence of moderating pipeline inflation could provide some relief to precious metals.The Strait of Hormuz and U.S.-Iran situation continued to influence global energy markets Tuesday, although expectations for renewed diplomacy reduced some immediate fears of another major military escalation. President Donald Trump said Monday that additional U.S. strikes against Iran were not necessary at present, following appeals from regional governments, including Qatar. The comments encouraged traders to reduce the geopolitical risk premium embedded in crude oil prices, extending Monday's sharp decline. However, Washington intends to maintain its naval blockade for now, and no comprehensive agreement has been reached over maritime security, sanctions relief or Iran's nuclear activities.Crude oil prices declined further Tuesday as traders responded to the reduced likelihood of immediate U.S. military escalation. Brent crude briefly fell below $90.00 a barrel, its lowest level since August, before recovering toward $90.50. Nymex WTI crude was trading near $85.30. The retreat followed Monday's settlements of $92.57 for Brent and $86.85 for WTI, extending a substantial reduction in energy prices from their October highs.Global equity markets were mixed before the U.S. open as investors reassessed Monday's broad recovery in light of the inflation surprise. Nasdaq-100 futures declined approximately 0.8%, while S&P 500 futures slipped around 0.3% and Dow futures were slightly higher in the latest available premarket indications. Technology shares remained sensitive to elevated financing costs and renewed scrutiny of artificial intelligence-related investment. European markets were supported earlier by lower crude oil prices, while Asian trading reflected a more cautious assessment of U.S. monetary policy. The inflation data increased the risk that rising Treasury yields could interrupt the recovery in equities.Monday's U.S. session had produced substantial gains, with the Dow Jones Industrial Average advancing 2.15%, the S&P 500 rising 2.35% and the Nasdaq Composite climbing 2.74%. The recovery was supported by declining energy costs and renewed buying after the previous week's technology-led selloff. Tuesday's hotter inflation report presents a new test of that rebound, particularly for companies whose valuations are sensitive to the outlook for borrowing costs.The key outside markets see Nymex WTI crude oil prices lower near $85.30 a barrel, while Brent crude was trading around $90.50 after briefly falling below $90.00. The yield on the benchmark 10-year U.S. Treasury note climbed toward 4.94%, while the two-year yield approached 4.69%. The U.S. dollar strengthened following the inflation figures, adding to pressure on precious metals. (Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.)Technically, spot gold bulls' next upside price objective is to push prices back above the $4,088.51 to $4,147.62 resistance zone, with a sustained move through the upper boundary targeting $4,200.09. Bears' next near-term downside price objective is a break below $4,051.45, with a deeper downside reference near $4,021.85. First resistance is seen at $4,088.51 and then at $4,147.62. First support is seen at $4,051.45 and then at $4,021.85.Spot silver bulls' next upside price objective is to drive prices back above the $53.420 to $54.640 resistance zone, with a sustained move through the upper boundary needed to improve the near-term technical outlook. The next downside price objective for the bears is a break below $51.270, with a deeper downside target at $50.010. First resistance is seen at $53.420 and then at $54.640. Next support is seen at $51.270 and then at $50.010.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.

Gold, silver retreat as high core CPI lifts December Fed hike odds- Kitco AM Report

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