Gold finishes down as investors assess Fed policy prospects

Gold prices ended in the red today, Oct. 12, as the US dollar and bond yields advanced after the release of US economic readings that indicated the resilience of the economy despite the Federal Reserve’s tight monetary policy.

Official data showed that US consumer prices increased more than expected in September, as the CPI index stood at 3.7% on an annual basis, against forecasts for 3.60%.

The number of Americans applying for unemployment benefits remained unchanged at 209,000 in the week ended Oct. 7, contrary to expectations of a surge to 210,000, reflecting the flexibility of the US labor market.

The CME FedWatch Tool indicated that the probability of a 25-basis-point interest rate hike by the US central bank at the forthcoming November meeting rose to 13.80%, compared to 9.10% yesterday. Investors are also pricing in an 86.20% chance that the Fed will hold steady to its current monetary policy.

In terms of trading, bullion for December delivery plunged by 0.25%, or $4.30, to finish at $1,883 per ounce, after growing to $1,898.30 an ounce in early trading.

However, the US dollar index, which measures the performance of the US currency against a basket of six major currencies, gained 0.65% to 106.49 points at 08:30 pm Makkah time.