FX.co ★ Gold Slumps on Hotter Inflation and Hawkish Fed Comments

Gold prices dropped sharply below $4,060 an ounce on Tuesday, pressured by stronger-than-expected US inflation data and hawkish comments from Federal Reserve Governor Christopher Waller, which brought the possibility of a 50-basis-point rate hike in December into sharper focus. US headline inflation slowed to 0.4% month-on-month in October 2026 from 0.6% in September, but still came in above market expectations of 0.3%. At the same time, core inflation remained unchanged at 0.3% for a third straight month, exceeding forecasts of 0.2% and underscoring persistent underlying price pressures.

Waller indicated that he supports further policy tightening in December and would back a half-percentage-point increase if inflation continues to accelerate. Money markets are currently pricing in roughly 28 basis points of additional tightening, implying that a 25-basis-point hike is fully anticipated, with some probability assigned to a larger move. The rise in interest rate expectations has weighed on gold by increasing the opportunity cost of holding the non-yielding asset.