Gold prices fell on Thursday as a higher-than-expected rise in U.S. September inflation cemented bets the Federal Reserve will persist with aggressive interest rate hikes.
Spot gold dropped 0.6% to $1,663.05 per ounce. U.S. gold futures settled down 0.4% at $1,670.20.
The U.S. consumer price index (CPI) rose 0.4% last month after gaining 0.1% in August, the Labor Department said. In the 12 months through September, the CPI rose 8.2% after gaining 8.3% in August.
The data signals the Fed will be more aggressive in fighting inflation by raising interest rates at a faster pace, pressuring gold, said David Meger, director of metals trading at High Ridge Futures.
Following the data, benchmark U.S. 10-year Treasury yields climbed. Higher interest rates and bond yields lower the appeal of non-yielding gold.
"There was some optimism going into the report that we had seen consumer prices abate and with the news coming out that was not the case, we saw the obvious result of that," Meger said.
Traders of U.S. interest-rate futures had all but priced in a fourth straight 75-basis-point hike at the close of the Fed's Nov. 1-2 meeting, after the inflation data they began pricing about a one-in-10 chance of a full percentage-point rate hike next month.
Fed officials reiterating their aggressively hawkish stance on monetary policy has kept the market uneasy due to fears of a "pending U.S. and/or global recession," Jim Wyckoff, senior analyst at Kitco Metals, said in a note.
"Today's CPI report suggests the Fed is correct regarding its belief that inflation is still not under control."
Spot silver dropped 1.3% to $18.82 per ounce, platinum firmed 2.2% to $899.17, and palladium dipped 1.2% to $2,110.80.