Gold Slumps! The Fed Leaves Door Open for a 50 bps Rate Hike

Global gold prices remained under pressure during Asian trading on Wednesday (November 11, 2026), following a sharp decline triggered by United States (US) inflation data that came in higher than anticipated. Spot gold traded at approximately US$4,036.30 per troy ounce—a marginal gain of 0.1%—after plunging 2.6% in the previous session. This weakness brought gold back toward the psychological level of US$4,000, erasing some of the gains accumulated over the past week. Selling pressure intensified after the US Consumer Price Index (CPI) report for October revealed inflation running hotter than market expectations, fueling concerns that the Federal Reserve (The Fed) will continue to tighten its monetary policy.

The rise in US inflation drove a surge in yields on US government bonds across various tenors, while simultaneously strengthening the US dollar. This environment puts pressure on gold, as the precious metal does not generate interest income. When bond yields rise, investors tend to favor interest-bearing instruments that offer more attractive returns. Furthermore, a stronger dollar makes gold more expensive for buyers using other currencies. The combination of these two factors has significantly dampened the appeal of gold following the release of the CPI data, which indicates that price pressures remain persistent within the US economy.

Market expectations regarding the Fed’s monetary policy have also shifted notably since the inflation report was released. Market participants now fully anticipate a 25-basis-point interest rate hike at the December meeting. This outlook is reinforced by comments from several Fed officials, who suggest that further monetary tightening is still required to bring inflation under control. Dallas Federal Reserve President Lorie Logan stated that at least two additional interest rate hikes, of 25 basis points each, remain necessary. In fact, he indicated that tightening measures might need to be implemented at a faster pace than in previous months.

Pressure on gold intensified after Federal Reserve Governor Christopher Waller raised the possibility of a 50-basis-point interest rate hike in December. This statement fueled investor concerns that the U.S. central bank could adopt a more aggressive stance if inflation does not show a sufficient slowdown. Nevertheless, the final decision will depend on the evolution of upcoming economic indicators. In other precious metals markets, the price of silver held steady at around US$51.56 per troy ounce following a 3.5% decline in the previous session, while platinum and palladium saw slight gains. These movements suggest that shifting interest rate expectations are influencing sentiment across the entire precious metals market.

The 2.6% drop in gold reflects a strong investor reaction to U.S. inflation figures that exceeded expectations, alongside an increased likelihood of more aggressive monetary tightening by the Federal Reserve. Fundamentally, a stronger dollar and rising bond yields remain the primary factors capping any recovery in gold prices. From a technical perspective, the US$4,000 level serves as a key psychological support, while US$4,100 acts as the immediate resistance in a potential recovery scenario. Should gold fail to hold the US$4,000 level, selling pressure could persist, pushing prices toward lower ranges. Conversely, if the dollar and bond yields begin to weaken, gold may see a gradual recovery. Consequently, the short-term outlook for gold remains under pressure, particularly as long as expectations for Federal Reserve interest rate hikes stay elevated.