Hawkish rate hike expectations rise, gold falls below the $4,000 mark

Impacted by higher-than-expected US inflation data and hawkish statements from Federal Reserve officials, the market has further strengthened its expectations for a Fed rate hike in December. Gold once fell by 0.8%, dropping below $4,000 per ounce, while the US dollar rose to its highest level since April 2025. The market has now fully priced in a 25 basis point rate hike in December and is also starting to price in a small probability of a 50 basis point hike. Rising interest rates have increased the opportunity cost of holding non-interest-bearing gold, and a stronger dollar has raised the cost of gold purchases for investors using other currencies. Despite short-term pressure, gold has largely remained above $4,000, indicating some buying support at this level, with central bank gold demand also remaining stable. Suki Cooper, Head of Commodities Research at Standard Chartered Bank, said that despite corrections in the stock market, gold prices have shown resilience, highlighting its enhanced safe-haven attributes and showing that it is no longer primarily used as a source of market liquidity.