Gold and Silver Slide as Hotter Inflation Ignites Rate Hike Fears

Spot gold dropped 1.18% to $4,110.90 an ounce, while silver retreated 1.97% to $57.890. The selloff follows a September CPI print of 0.6% on the month, outstripping the 3.6% consensus. Rising energy costs—specifically a 9.1% jump in gasoline prices—served as the primary catalyst, signaling that the ongoing oil supply shock is embedding itself into broader headline inflation.

This shift in data has revived the likelihood of a December rate hike, despite a mixed global risk environment. The 10-year Treasury yield remains anchored near 5.2%, creating a high-interest-rate environment that weighs heavily on non-yielding bullion. Investors are now turning their attention to Thursday’s producer price index and retail sales data to determine if these cost pressures will persist or if the economy will show signs of softening.

Geopolitical instability in the Strait of Hormuz continues to provide a floor for oil prices, with Brent crude trading near $106.60 a barrel. While such conflicts traditionally support gold as a safe-haven asset, the current market transmission is distinctly bearish: expensive oil is fueling inflation expectations, which in turn strengthens the dollar and pushes yields higher, further pressuring metals. Analysts remain focused on the $4,066.54 support level for gold to see if the current downside momentum will hold.