Gold slips as higher oil, US inflation data bolster Fed hike bets
Gold slipped on Friday as higher oil prices spurred inflation concerns and robust US inflation data strengthened the case for another Federal Reserve rate hike later this year.
Spot gold was down 0.6% at $3,997.39 per ounce by 0255 GMT, while US gold futures for December delivery dropped 0.6% to $4,007.80. Bullion was on track for a second consecutive monthly decline.
"Gold’s slide is asking serious questions of technical support around the $4,000 level. Dip buying has previously limited declines, but it remains to be seen whether value buying will come to gold’s rescue," said Tim Waterer, chief market analyst at KCM Trade.
"There were enough bullish indicators in the US macro data this week to keep the Fed on track for a potential December hike, which combined with oil at present levels means that gold continues to lose out from an inflation perspective."
US inflation accelerated in September as consumers paid more for gasoline and other goods, supporting economists' expectations of an interest rate increase from the Fed in December.
Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.
Traders are now pricing in about a 75% chance of a rate hike in December, according to the CME's FedWatch Tool.
Oil prices climbed on Friday, on track for a fourth monthly gain and the steepest since July, on supply concerns after Yemen's Iran-aligned Houthis stepped up attacks on Saudi Arabia. [O/R]
Elsewhere, annual core inflation in Japan's capital well exceeded the central bank's 2% target in October, data showed on Friday, highlighting mounting price pressure.
Spot silver slid 2.1% to $51.27 per ounce, platinum dropped 1.9% to $1,458.85 and palladium fell 2% to $986.08. All three metals were headed for weekly and monthly declines.
