Gold gives back all of Monday's rally and more after a hot core CPI: down about 1.8% to $4,042

Gold reversed Monday's gain within an hour of the October inflation report. December gold futures traded at $4,042.10 at 9:42 AM ET Tuesday, down from Monday's final print of $4,114.50, a drop of 1.76% by our arithmetic from Yahoo Finance data. That is below Friday's close of $4,074.90, so the whole of Monday's rebound above $4,100 is gone.

The numbers

Source: Yahoo Finance, early-session prints that can reverse. Spot prices differ slightly from futures: Kitco put spot gold near $4,055 (down 2.03%) and spot silver near $51.70 (down 3.01%) earlier in the morning.

Why this one hit harder

Headline CPI rose 0.4% against 0.3% expected, and core rose 0.3% against 0.2%, as we reported in our CPI story. Bloomberg's headline framed the core miss as supporting a rate hike. Kitco reported that core inflation has now risen 0.3% in each of the last three months, and that futures pricing before the release put roughly 84% odds on a quarter-point hike at the Dec. 8 to 9 meeting. After the data and Governor Christopher Waller's remarks, Kitco said a quarter-point move was almost fully priced, with some probability on a larger one. We did not independently confirm those odds.

The mechanism is the same one that did not matter on Monday. Gold pays no interest, so when Treasury yields and the dollar rise together, holding it costs more by comparison. Monday, cheaper oil and a softer dollar outweighed hike bets. Tuesday, the data flipped both.

Who feels it

• Jewelers, coin dealers and pawn shops reprice inventory and buy-back quotes when gold moves close to 2% in a morning. A $72 drop on an ounce is $2.32 per gram of pure gold at these prices.
• Gold and silver miners sell at lower realized prices if the decline holds; the reported results we covered, such as Barrick's, were struck at higher averages.
• Anyone holding metal as a hedge just saw it fall on the same day inflation surprised higher, a reminder that gold reacts to real yields more than to the inflation number alone.

What to watch

Kitco lists Friday's October producer price index at 8:30 AM ET as the next inflation test, Thursday's jobless claims and existing home sales, and a $42 billion 10-year note auction Tuesday. Treasury markets are shut Wednesday for Veterans Day. See our gold chart and markets board for live prices.

Sources: Yahoo Finance; Kitco News (AI-assisted draft, reviewed by Kitco editors; figures cross-checked against our own Yahoo reads where possible); Bloomberg headline; BLS; Chronicle reporting. Some data may be delayed. This is market information, not investment advice.