WASHINGTON (dpa-AFX) - Completely erasing the gains from Monday' session, gold prices have tumbled on Tuesday amid rising expectations of a higher interest rate regime in the U.S. in the near-term following comments from senior officials of the U.S. Federal Reserve on the necessity to combat price rise as well as today's October inflation data release.
Front Month Comex Gold for December delivery has slumped by $86.30 (or 2.10%) to $4,028.20 per troy ounce.
Front Month Comex Silver for December delivery has also tumbled by $1.448 (or 2.75%) to $51.245 per troy ounce.
Yesterday, remarking that the Fed should proceed with care, Richmond Fed President Tom Barkin cautioned that tackling inflation could be the biggest policy risk.
Chicago Fed President Austan Goolsbee warned that the AI-driven economic expansion and widening price pressures could intensify inflation, which would force policymakers to address rising costs.
Today, Fed Governor Christopher Waller stated that he would support a quarter-point rate increase in December and might even push for a half-point move if inflation data is worse than expected.
On the economic front, data from the U.S. Automatic Data Processing revealed that private employers in the U.S. added an average of 19,750 jobs per week in the four weeks ending October 24.
Data from the U.S. National Federation of Independent Business revealed that the Small Business Optimism Index edged down to 97.80 in October from 97.90 in September, a new low since June.
According to the data from the U.S. Bureau of Labor Statistics, on a month-on-month basis, the October Consumer Price Index increased 0.40%, compared to a 0.60% increase in September, and above analysts' predictions of 0.30%.
On a month-on-month basis, the core consumer prices (which exclude food and energy goods), increased by 0.30% for the third consecutive month in October, above market expectations of 0.20%.
Of note, October's report does not contain the annual inflation figures as the BLS was restrained from publishing full October data in 2025 due to the government shutdown and hence no data is available now for comparison.
The U.S. Federal Reserve meets on December 8-9 to decide and announce interest rates. Investors have increased their bets on an interest rate hike.
With inflation running high above the central bank's target of 2.00% range, currently, the odds on a 25-basis-point rate hike (from 4.00% to 4.25%) have increased to 88.70% while the bets on a 50-basis-point stand at 11.30%, according to the CME Group's FedWatch Tool.
The bets on the Fed holding on the rates without change now stand at nil.
Anxiety about a renewed war in the gulf diminished after U.S. President Donald Trump stated on Sunday that he felt that the need for new attacks on Iran would be highly unlikely if the ongoing efforts for peace talks to settle the crisis progressed well.
The Prime Minister of Qatar Sheikh Mohammed bin Abdulrahman bin Jassim Al Thani met Trump in the U.S. yesterday.
Through Truth Social, Trump remarked that Qatar, Saudi Arabia, the U.A.E., Bahrain, Kuwait, and other Arab nations have agreed with him that Iran cannot have a nuclear weapon but for now, they wanted the U.S. to maintain status quo. Trump stated that he had agreed to that request.
Trump asserted that the ongoing naval blockade against Iran and the Operation Iron Gate would continue.
Trump stressed that if the situation changes in the Middle East, U.S. forces are locked and loaded to go forward, indicating the possibility of readiness to attack, but emphasized that he is seeing a positive momentum to end the conflict.
Further, U.S. Secretary of State Marco Rubio stated that the economic campaign against Iran is working so well that there would not be any need for a major combat operation.
Crude oil prices initially slumped as supply disruption concerns lowered.
However later in the day, the Secretary of Iran's Supreme National Security Council Major General Mohsen Rezaei denied any meetings between officials of the two countries and added that all U.S. claims about ongoing negotiations with Iran and a meeting in Qatar are lies.
Rezaei accused the U.S. of making such claims on negotiations to bring down oil prices and ease the economic pressure in the U.S.
As a result, crude oil prices partially recovered but traded in the negative territory.
Today, the U.S. dollar index was last seen trading at 102.30, up by 0.65 (or 0.64%) today.
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