Quick overview

Gold (XAUUSD) fell -0.54% today and traded near $4,117 per ounce ahead of U.S. inflation data.

Fed Hike Odds Rise to 84%

Markets are now betting on 84% odds of a December rate hike. This follows October payrolls of 165,000 jobs, which were well above expectations, with unemployment at 4.1% and hourly earnings up +0.4%.

This matters because higher rates lift real yields, which also adds pressure on gold since it pays no interest. Meanwhile, the 10-year yield is near 4.88% and the 2-year yield is near 4.56%, which shows that the bond market is backing the hike case.

Hike odds were near 75% to 79% a week ago. However, Richmond Fed President Tom Barkin said the Fed should move “with care” and he has no base case for December, which means a soft CPI could cut these odds quickly.

Oil Slides on U.S.-Iran Deal Hopes

Brent is near $92, which is down about -22% from its late-October peak above $117. Trump said further strikes on Iran are highly unlikely if a strong agreement is reached. The conflict is eight months old, and crude flows have nearly returned to pre-war levels. This shows that inflation pressure from energy could ease, which may limit how far the Fed needs to go. At the same time, falling oil could ease the safe-haven demand tied to the conflict. This means gold is now trading more on rates and inflation than on geopolitical fear.

Midterm Election and U.S. Debt

On the other hand, Democrats won both chambers of Congress, which brought attention back to U.S. debt above $40 T. The FY2026 deficit was about $1.99 T, which represents 6.2% of GDP. Now this shows that debasement worries are supporting gold, which moved from about $3,900 to a high near $4,145 after the results.

U.S. CPI Test Today

October CPI is due today at 8:30 a.m. Eastern. Headline CPI is expected at +0.3% month over month and core CPI at +0.2%, which is below September’s core reading of +0.3%. Only the index level and monthly change will be reported because of last year’s government shutdown, which means there is no yearly figure to compare. However, September headline CPI was still 3.7% year over year.

On the other hand, traders now treat the release as an ordinary event, not a second shock. A softer reading could support a move toward $4,200, while a hotter one could lift hike odds further and drag gold below $4,000.

Technical Levels and What to Watch Next

On the technical levels, $4,088 is the major support level for now and the second support level is at $4,051. On the upside, $4,147 is the initial resistance level. Any close above $4,130 could keep a move toward the initial resistance level. However, any close below $4,088 could drag the prices towards $4,051.

Meanwhile, smaller moving averages pattern also shows that short-term momentum is improving. For now, investors will be watching today’s CPI release, U.S. producer inflation due on Friday, and the December Fed meeting.

FAQs

Why is gold falling today?

Gold is facing pressure from rising expectations of a December Fed rate hike. Higher interest rates lift real yields, making non-yielding gold less attractive to investors.

What are the key support and resistance levels for gold?

Gold has initial support at $4,088, followed by $4,051. On the upside, $4,147 is the initial resistance, while a close above $4,130 could support a move toward that level.

Bottom Line

Gold is facing pressure from rising Fed rate hike expectations ahead of the October CPI release. However, concerns about U.S. debt and continued demand for gold could provide support. Investors will also watch oil prices and geopolitical developments. For now, $4,088 is the major support level, while $4,147 remains the initial resistance to watch.

Arslan Ali Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.

His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.

His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.