Gold tumbles below $4,000 as inflation and stock losses rattle investors

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Gold tumbles below $4,000

Highlights

Spot gold fell 0.57%, futures lost 0.59%.
Higher inflation fuels Fed rate hike bets.
Tech stock selloff adds pressure on gold.

Spot gold fell 0.57% to $3,997.75 an ounce, while December gold futures declined 0.59% to $4,007.55, according to the latest market quotes. Bloomberg reported that higher oil prices and renewed selling in technology shares were increasing pressure on bullion, which has lost nearly 4% in October.

Inflation strengthens expectations of higher interest rates

U.S. inflation data added to concerns that monetary policy could remain restrictive for longer than investors previously expected. The personal consumption expenditures price index increased 0.5% in September, its largest monthly advance since March, strengthening expectations of another Federal Reserve rate increase before year-end.

Higher energy prices have contributed to the inflation outlook as renewed tensions involving Iran threaten oil supplies. Crude prices climbed amid concerns that Washington could resume military strikes after the upcoming U.S. midterm elections, increasing uncertainty about the direction of energy costs.

Although gold is traditionally viewed as protection against inflation, higher interest rates can reduce its appeal. Bullion does not generate interest, making interest-bearing assets more attractive when borrowing costs and bond yields rise.

Technology stock losses increase pressure on bullion

The decline in gold has also coincided with a broad retreat from technology stocks. Disappointing corporate earnings have intensified concerns about artificial intelligence investment, triggering another round of selling across global equity markets.

Sharp stock market declines can force investors to liquidate profitable or relatively stable holdings to cover losses elsewhere. Gold can therefore fall alongside equities during periods of financial stress, despite its reputation as a defensive asset.

The metal has struggled to recover after an earlier technology-led selloff pushed prices to their lowest level since July. Purchases by Chinese households and longer-term investors have provided some support near $4,000 but have not reversed the monthly decline.

Gold and silver face further market volatility

Silver has experienced a steeper correction than gold, falling approximately 15% in October. The metal traded near $51 an ounce after previously reaching a peak above $120 during a rally earlier in the year.

The widening gold-silver ratio indicates that silver has weakened considerably relative to bullion. Investors are also monitoring whether additional equity losses could trigger further selling across precious metals.

Gold's immediate outlook depends on inflation expectations, Federal Reserve policy, and the stability of global stock markets.

Earlier, we reported that Warsh keeps the December rate hike in play as the Fed holds steady.

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