Gold slumps as faster US inflation stokes Fed rate hike wagers

Published Thu, Oct 15, 2026 · 08:31 AM

[LONDON] Gold slumped after US consumer prices jumped the most in five months, reigniting worries that the US Federal Reserve will need to raise interest rates further to combat inflation.

The consumer price index rose 0.6 per cent in September from a month earlier, according to Bureau of Labor Statistics data out on Wednesday (Oct 14), and climbed 3.7 per cent from a year earlier.

The move was driven by rising fuel costs, while a gauge of underlying price pressures also rose more than expected.

Bullion slumped as much as 2.1 per cent near US$4,070 an ounce, with a flare-up in attacks in the Middle East also stoking worries that further disruptions to regional energy supplies will accelerate inflation and add to the case for higher borrowing costs, a headwind for non-yielding gold.

Silver plummeted to the lowest level since Jul 20. Platinum and palladium also slumped, while the US dollar rallied 0.3 per cent.

Copper dropped 0.4 per cent on the London Metal Exchange after the CPI print, with the rallying US dollar and the prospect of higher borrowing costs dimming the outlook for the key industrial metal. It settled down 0.6 per cent.

The Fed in September responded to renewed price pressures by raising interest rates for the first time since 2023. Since then, top officials have signalled they have time to weigh incoming data before acting again, though the median official expects one more increase in 2026, according to their latest projections.

The broad upswing in consumer prices had earlier triggered a rout in Treasuries. The sell-off stalled as an increase in expectations for future Fed rate hikes sparked declines for US equity benchmarks, sending the S&P 500 Index to its lowest level in more than a week.

Looking ahead, traders will be watching September US producer prices data, while also monitoring Fed’s chairman Kevin Warsh remarks late on Thursday during New York time in Bangkok, where he is scheduled to appear in a fireside chat with International Monetary Fund managing director Kristalina Georgieva.

Gold is nearing key support around US$4,000 an ounce, a level that held in September before softer US inflation and jobs data fuelled a rally, Bart Melek, global head of commodity strategy at TD Securities said in a note.

Further disruptions to Middle East oil supplies stemming from the Iran war, however, could fuel inflation.

“This would no doubt drive rate expectations sharply higher, representing a downside risk for gold. As such, prices could drift materially below US$3,900/oz,” he added. BLOOMBERG