Gold Drops Below $4,100 as Hot Inflation Fuels Rate Hike Bets

The inflation report showed consumer prices rising 0.6% in September, bringing the annual rate to 3.7% and exceeding consensus expectations. The data significantly altered market sentiment, with the probability of an October Fed rate hike jumping to nearly 40% from roughly 20% prior to the release. Gasoline costs, which surged 9.1%, served as a primary driver for the headline increase.

Precious metals bore the brunt of the market reaction. Silver faced heavy selling pressure, plunging 6.16% to $55.410 an ounce. North American equities also struggled under the weight of higher yields, with the Nasdaq Composite falling 1.9% and the S&P 500 recording its worst daily performance since July. Meanwhile, geopolitical tensions in the Middle East provided a conflicting backdrop; while energy markets remained volatile following a Houthi strike on a Saudi Aramco facility, elevated oil prices only served to reinforce inflation concerns, further constraining the outlook for precious metals.