Gold prices dropped sharply on Thursday, November 12, slipping under $3,900 per ounce as a combination of stronger US inflation data and renewed interest rate expectations from the Federal Reserve drove a fourth consecutive decline for the precious metal.
Inflation Data Fuels Rate Hike Bets
The US Bureau of Labor Statistics reported an increase of 0.4% in consumer prices for October, surpassing market forecasts of 0.3%. Core inflation, which excludes the impact of food and energy prices, climbed 0.3% during the month, also beating estimates.
These figures strengthened the consensus that the Federal Reserve could raise its benchmark interest rate at the December 8-9 meeting. Investors assigned a 91% chance to a 25-basis-point hike, with some speculating about a more aggressive move.
A higher federal funds rate can make US government bonds more attractive than gold, which pays no interest, while a strengthening dollar boosts the cost of bullion for buyers using other currencies. On Thursday, the dollar approached a 19-month high, amplifying downward pressure on gold prices.
Momentum swung rapidly after key inflation metrics topped expectations, raising the likelihood of further rate hikes and causing spot gold to fall as much as 2.9% to $3,871.31 per ounce, its weakest level since October 2025.
December US gold futures fell by 3.2% to near $3,872, marking a sharp reversal after the precious metal had managed to regain ground above $4,040 earlier in the month.
Geopolitical Risks Fail to Lift Gold
Even as tensions in the Middle East escalate, gold has struggled to perform as a safe-haven asset. The ongoing conflict involving Iran has led to renewed concerns about oil supply, contributing to higher energy prices and increased volatility in the oil market.
Historically, market uncertainty linked to geopolitical risks has supported gold demand. However, rising interest rates and the opportunity cost of holding non-yielding assets appear to be outweighing these traditional drivers.
Elevated oil prices can fuel inflation, prompting central banks to keep monetary policy tighter for longer and further weighing on gold’s appeal as a portfolio hedge.
Despite this environment, the World Gold Council reported that central banks acquired 321 tonnes of gold in the third quarter, and physically backed gold ETFs saw inflows of 211 tonnes, signaling continued structural demand for the metal.
These purchases have provided some support but have not been enough to counter macroeconomic headwinds in the near term.
Mini dictionary: World Gold Council, an industry body that monitors global gold demand trends by collecting data on gold purchases and investment flows from central banks and ETFs.
Technical Levels and Upcoming Data
Gold’s latest slide brings renewed attention to the $3,900 level, which recently failed to hold as reliable support. A move back above this mark would offer a first sign of potential stabilization, while the $4,000 level remains a critical psychological hurdle for bullish traders.
If declines persist, gold could approach the next support zone around $3,800, depending on upcoming economic releases and evolving interest rate forecasts.
| Event/Level | Price/Probability |
|---|---|
| Spot gold low | $3,871.31 |
| December gold futures | $3,872 |
| Previous gold high | $4,040+ |
| Fed rate hike odds (Dec) | 91% for 0.25% |
Traders are now closely watching Friday’s US Producer Price Index report, which could further influence interest rate expectations. Persistent inflationary pressure might strengthen the dollar and continue to challenge gold’s attempts to recover.
