Spot Gold Sits Near $3,978 After Third Straight Daily Decline as Fed December Hike Bets Firm

Since gold fell nearly 3% on Tuesday, Nov. 10, after a hotter-than-expected October inflation report, the metal has not found its footing. Spot gold was at $3,977.99 an ounce by 0506 GMT on Thursday, Nov. 12, down 0.2% on the session. Earlier it touched its lowest level since Nov. 4, and one chart-based tally put the intraday low near $3,968.

U.S. December gold futures fell 0.4% to $3,983.20.

The data that started it

October headline CPI rose 0.4% for the month against a 0.3% forecast. Core CPI rose 0.3%, above the 0.2% forecast. Core has now risen 0.3% for three straight months.

That core number mattered because Fed Governor Christopher Waller had said beforehand that a 0.3% core reading would make him consider a 50-basis-point hike in December. The print landed exactly there.

Waller has since said a December hike remains likely and that persistent inflation raises the possibility of a larger move. Philadelphia Fed President Anna Paulson said Tuesday that further rate increases would be needed to bring inflation back to the Fed's 2% target.

Hike bets and the dollar

A 25-basis-point December hike is now effectively fully priced. CME data put the odds of a quarter-point move at 90.6% and a half-point move at 9.4%, and traders are also pricing a second hike in March, according to the CME FedWatch tool.

The dollar climbed to a 19-month high against major peers on Thursday. The Dollar Index is at its strongest since April 2025. The 10-year Treasury yield briefly touched roughly 5%.

Both moves hit gold the same way. A stronger dollar makes bullion pricier for buyers in other currencies, and higher yields raise the opportunity cost of holding a metal that pays nothing.

Gold also did not behave as a haven during the Iran war. It has traded mainly on rate expectations, with oil-driven inflation feeding bets on Fed tightening.

TD Securities sees $3,900 tested

Bart Melek, TD's head of commodity strategy, said in a report published Tuesday that gold is likely to retest support near $3,900 an ounce. He said the pressure on the metal has further to run before the longer-term bull case can return.

That is a reversal. In early July, Melek argued a break below $3,900 was unlikely as long as an early Fed hike stayed off the table. As recently as late October, TD described gold as range-bound between $3,900 and $4,250.

Melek has not given up on the long view. He has said gold could reach record highs above $5,300 an ounce in 2027 once the conflict and the oil-driven inflation it has fueled begin to fade, provided long-term support holds.

Not everyone is turning bearish

The Fed is not unanimous on how far to go. Vice Chair for Supervision Michelle Bowman said Tuesday that persistent inflation is a key concern but stopped short of advocating further hikes. She said she expects price pressures to moderate next year as the effect of recent economic and geopolitical shocks fades.

On the market side, Ilya Spivak, head of global macro at Tastylive, said gold has had a "meaningful pullback" since the CPI data but that markets are "pointedly struggling for a follow through."

Analysts at OCBC wrote that they see "two-way risks in the near term," with oil, yields and the dollar the main drivers. "We are not turning bearish on its medium-term prospects," they said.

TD adds that any sign of easing oil prices would weaken the inflation case for more hikes and could quickly revive interest in gold.

Central banks keep buying

The official sector was already a heavy buyer before this pullback. The World Gold Council said Nov. 3 that third-quarter central bank demand rose 42% year over year to 321 tons, the highest quarterly total since the end of 2024 and well above the five-year quarterly average of 227 tons. The People's Bank of China led purchases, followed by the National Bank of Poland.

Year to date, central banks have bought 675 tons, up 6% from the same period last year. The Council raised its 2026 forecast and now expects at least the 848 tons bought in 2025.

Gold prices averaged $4,262 an ounce in the third quarter, and the metal now trades below that level. Some analysts flag the $3,940 to $4,000 zone as an important near-term area, and TD notes that central bank buying has tended to pick up when gold trades below $4,000.

Physically backed gold ETFs took in 211 tons in the third quarter, a record $31 billion of inflows, bringing holdings to an all-time high of 4,256 tons. Bar-and-coin demand fell 19% to 268 tons, and jewelry demand fell 17%. The Council said retail investors were waiting for a clearer price trend.

What comes next

The U.S. Producer Price Index report is due Friday, Nov. 13. Fed speeches and the December policy decision are the other dates traders are watching.

TD says a decisive break below $3,900 would signal the rate story still has the upper hand. Holding above that level would keep its recovery scenario intact.