Safe haven, sales version. Keynes saw the gold standard as a “barbaric relic”. And this Wednesday, October 14, the market seemed to prove him right for one afternoon. An ounce of gold thus slipped towards $4,100 after US inflation was hotter than expected, at 3.7% in September.
The yellow metal lost around 1.5% because an expression is making a comeback in the markets: rising rates.
American consumer prices increased by 3.7% over twelve months, above the 3.6% expected.
The price of an ounce falls around $4,110, near its lowest of the session.
Traders now see almost a one in two chance of monetary tightening from the October committee.
Bitcoin also lost a thousand dollars in the wake of the figure.
Gasoline causes US inflation to soar
The Bureau of Labor Statistics released its figures at 8:30 a.m. New York time, or 2:30 p.m. in Paris. According to the official BLS report, the consumer price index increased by 0.6% month-on-month. The increase reached 3.7% over one year, compared to 3.4% in August. The consensus was for 3.6%.
The culprit has a name. Gasoline jumped 9.1% in one month. It therefore alone accounts for more than half of the monthly increase. Fuel shows +34.2% over twelve months and energy +20.4%. Blame it on the oil crisis caused by the war in Iran.
But energy doesn't explain everything. Underlying inflation, excluding food and energy, rose to 2.6% over one year compared to 2.5% expected. However, it came out of a five-year low of 2.4% in August. Housing also accelerated to +0.4% over the month. Jeffrey Roach, chief economist at LPL Financial, sums it up bluntly: inflationary pressures “extend beyond energy.”
Why gold stalls when the Fed tightens its tone
An asset that does not pay a coupon or dividend does not cope well with competition from bonds. When yields rise, holding gold costs more in lost earnings. The yield on the 10-year US Treasury rose 8 basis points to reach 5.3%. The dollar also strengthened by 0.5%.
The Kobeissi Letter was among the first to report the slide on X, with supporting graphics. The gold futures contract appears at $4,113.7, down $63.6 during the session.
Artem Bakushev, head of risk at Monaxa, describes a classic sell-off in the face of the rise in the dollar and real rates. According to him, the report provides “real ammunition” to the hawks, supporters of a strict monetary policy.
The odds followed. InvestingLive chief analyst Adam Button puts a number on the shift. Before the publication, markets estimated the probability of a rate hike at the October meeting at 21%. After the figure, they placed it at 47%. They now expect 36 basis points of tightening by the end of 2026, compared to 27 previously.
Not everyone cries wolf. Jeff Schulze, of the Franklin Templeton Institute, however, considers the bar high enough for a new turn of the screw. It is based on the latest speeches from Fed officials.
Bitcoin and gold take the same blow
Cryptocurrencies haven't played it safe either. Bitcoin lost around $1,000 after the release to return to around $82,800. At the same time, Nasdaq 100 futures fell 0.65%.
Because a more expensive dollar and higher rates weigh on any asset without yield, bitcoin like gold. The American 10-year pays 5.3% for inflation of 3.7%. A risk-free investment therefore now yields 1.6 points more than the price increase.
