Gold Holds Loss as Hot Inflation Lifts October Rate-Hike Bets

(Bloomberg) -- Gold held a decline as a jump in US inflation stoked worries the Federal Reserve will have to raise interest rates further to keep prices under control.

Bullion traded near $4,105 an ounce after slumping 1.3% the day before, while silver held a 6% loss from the previous session. Data from the US Bureau of Labor Statistics on Wednesday showed that the consumer price index rose 0.6% on a monthly basis, the fastest since April, due to elevated energy costs.

Gold has labored under high borrowing costs, losing more than 20% since energy supply disruptions due to the US-Iran war triggered global inflation and central bank tightening.

Investors increased their bets of a rate hike at the Fed's meeting later this month to about 30% after the print. Treasury yields were near multiyear highs while the dollar rose to the highest in more than a year, making the precious metal priced in the currency more expensive.

Federal Reserve Bank of Chicago President Austan Goolsbee said the data was "discouraging," and warned the buildout of infrastructure related to artificial intelligence may also be overheating the economy. He added it's still too soon to know whether interest rates are high enough at this point to deliver on the central bank's 2% inflation goal.

Investors will track final clues on monetary policy from Fed Chairman Kevin Warsh before the central bank begins a media black-out on Saturday before the Oct. 27-28 meeting. He is due to speak late Thursday New York time at the International Monetary Fund meetings in Bangkok.

Spot gold was mostly unchanged at $4,102.60 an ounce at 7:32 a.m. Singapore time. Silver was flat at $55.53. Platinum and palladium were little changed. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.1% lower.