Gold Price Fell Below $4,000 While the Fed Still Waits on October’s Inflation Data

Spot gold fell below $4,000 an ounce on Friday morning, trading at $3,998.35 at 11:20 a.m. EDT, Reuters’ first sub-$4,000 print since mid-July.

Different vendors printed different numbers for the same morning: $3,986.50 at the intraday low, $3,998.72 in one snapshot, $3,993.96 on Trading Economics’ daily page. The differences are snapshots from different vendors at different hours, and Trading Economics says so itself — its gold prices come from over-the-counter and CFD instruments and are “intended to provide you with a reference only, rather than as a basis for making trading decisions.” It adds that it doesn’t verify any data.

The week’s arithmetic is simpler. Gold lost 4% on the week, its worst since June and its second straight weekly decline. Thursday’s session took 2.78%, nearly $120, closing at $4,023.20. December futures settled Friday 1.3% lower at $4,007.90 while silver fell with gold, down more than 1.8% on Friday.

The hard numbers behind the inflation channel are all September’s. The Bureau of Labor Statistics reported September CPI up 0.6% on the month and 3.7% on the year. Gasoline rose 9.1% in September. It accounted for over half of the monthly all-items increase, the BLS wrote. The energy index rose 5.2% for the month and 20.4% over the year. Core CPI rose 0.3% in the month and 2.6% over twelve months. That strips out food and energy.

September producer prices were hotter still. The PPI rose 1.3% for the month, the largest advance since March 2022, and 6.3% over twelve months, the largest since December 2022. Final-demand goods jumped 2.6%, the biggest rise since the series began in December 2009, and over 80% of that came from energy, up 10.8%. Gasoline surged 20.3%, diesel 21.0%, and crude petroleum 28.3%. Unprocessed energy materials rose 22.2% in the month.

The Fed holds its October meeting on the 27th and 28th, before any October inflation data exists. October CPI is due November 10; October PPI, November 13. September’s prints are the newest inflation data the meeting can use. The PCE report the Fed watches most closely lands October 29, also after the meeting.

The rate-hike odds disagree with each other. Reuters carried a 92% chance the Fed holds steady next week and a 78% chance of a December hike; other outlets printed 81% for December, or 92.8% and 74.8% for the two meetings. The figures disagree because they are different snapshots of moving bets. CME, whose FedWatch tool produces them, says the probabilities are “as implied by 30-Day Fed Funds futures prices” and asks reporters to attribute them to “CME FedWatch.” They’re traders’ positions implied by futures prices.

Brent crude traded near $116 a barrel on Friday, its highest in about six months, on concern about Middle East supply. But the Houthi attack claims behind that concern are exactly that — claims. Reuters reported them, noted Saudi authorities had not immediately confirmed them, and said it couldn’t independently verify them. The attack claims remain unconfirmed.

Jim Wyckoff, a market analyst at the American Gold Exchange, gave Reuters the day’s mechanical explanation: the tech-stock selloff forced margin calls that had traders selling gold and silver to raise cash, and “heightened inflation concerns suggest that major central banks of the world won’t be able to ease monetary policies as quickly as they want to. All that’s working against the gold and silver market bulls at present.” Justin Lin of Global X ETFs called it a liquidity-driven selloff and put the next test at $3,900. December gold futures settled Friday at $4,007.90, still a touch above $4,000.