US inflation exceeds expectations, gold falls below $4,100 per ounce

⑴ Gold prices fell below $4,100 per ounce on Wednesday, hitting the lowest level since early August, as a stronger-than-expected US inflation report prompted markets to reassess the Federal Reserve's interest rate outlook. ⑵ The annualized US inflation rate for September rose to 3.7%, higher than the expected 3.6%, driven by rising energy prices. ⑶ Monthly CPI increased by 0.6%, the largest rise in five months; core inflation also exceeded expectations, reaching an annualized 2.6% and a monthly 0.3%. ⑷ Market data shows investors currently see about a 50% probability that the Federal Reserve will keep rates unchanged at its October meeting, down from over 78% before the report was released. ⑸ Meanwhile, the probability of a rate hike in December increased from the previous 88% to nearly 99%. ⑹ Although recent Federal Reserve communication has not signaled a back-to-back rate hike in October, the higher-than-expected core CPI increase has brought this possibility back into focus, putting further pressure on non-yielding asset gold.