(Kitco News) - The gold market has been hit with significant selling pressure as persistent inflation pressures are adding to fears that the Federal Reserve could aggressively raise interest rates next month to cool rising consumer prices.
The Consumer Price Index (CPI) rose by 0.4% last month, following September’s 0.6% increase, the U.S. Bureau of Labor Statistics announced on Tuesday. The inflation data was hotter than expected, as economists were looking for a 0.3% increase.
The report also showed that higher energy prices have become further embedded in the broader economy, as core inflation, which strips out energy and food prices, rose more than expected. Core CPI increased 0.3% last month, matching September’s increase. According to consensus estimates, economists were expecting a 0.2% increase.
Last year’s months-long government shutdown is also coming back to haunt economists, as no annual inflation data was provided in the latest report.
“BLS did not collect survey data for October 2025 because of a lapse in appropriations. For most CPI series, BLS could not publish October 2025 indexes. As a result, BLS cannot publish 12-month percent changes for October 2026 for indexes where October 2025 data are unavailable,” the report said.
Last month, September’s 12-month headline CPI showed inflation rising 3.7%. Core CPI was up 2.6%.
The gold market was already struggling ahead of the latest CPI data, as investors reacted to comments from Federal Reserve Governor Christopher Waller, who expressed support for a potential 50-basis-point rate hike next month while speaking at the Bank of England Watchers Conference in London.
“I believe a 50-basis-point hike in the policy rate should be considered at the December meeting. Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take,” he said.
Spot gold last traded at $4,054.90 an ounce, down 2% on the day.
Waleed Said, Technical Analyst at GivTrade, said that the latest inflation data does not bode well for gold prices through year-end.
“The core message is that inflation remains elevated and is not coming back to target on its own,” he said. “That's why December is now effectively priced. Policy has to get more restrictive before this is under control, and a hike on 9 December is the starting point rather than the finish. Gold down more than 2% on the day tells you the whole story. When the market decides tighter policy is coming, gold is the first thing to reprice and it's repricing a Fed that is going to keep pushing until inflation is heading back to 2%.”
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, said in a note that while he expects the Federal Reserve to raise rates by only 25 basis points in December, the latest inflation data puts a January rate hike on the table.
Looking at the components of the report, while energy prices continue to rise, the BLS highlighted a new risk: rising housing costs. The report said that its shelter index rose 0.3% last month, accounting for more than 30% of the monthly headline increase.
Energy costs also continue to rise, albeit at a slower pace than in September. The report said that the energy index rose 0.7%, compared to a 5.2% increase the previous month. The food index increased 0.5%.
