Gold Slumps as Dollar and Rate Bets Tighten Their Grip, With Official Buyers Offering Only Conditional Support
Published on 11/12/2026 at 16:51 | Editorial boerse-global.de
Gold is coming under heavy selling pressure as a firmer dollar and hardening expectations for tighter US monetary policy combine to weigh on the metal. The spot price fell 3.3% on the day, with the policy backdrop firmly at the center of the latest slide.
The dollar climbed to a 19-month high, according to Reuters, while hawkish comments from Federal Reserve officials reinforced bets on a higher benchmark rate. Reuters attributes the recent price decline to that combination. Markets are now largely positioned for a December rate increase.
Inflation Surprise Adds Fuel to Rate Expectations
Tuesday's US consumer price data gave those expectations an extra push. Prices rose 0.4% in October from the previous month, ahead of the 0.3% economists polled by Reuters had forecast. Fed Governor Christopher Waller had earlier floated the possibility of a 50-basis-point hike in December.
Attention now turns to the scale of any move. For gold, the latest signals argue against relief from monetary policy for as long as the market keeps its expectations of higher rates intact. According to CME FedWatch data cited by Reuters, the probability of a 25-basis-point December hike stood at 89%, with 11% assigned to a larger step — meaning futures markets are pricing not only further tightening but also the risk of a more aggressive move.
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Goldman Trims Its Expected Price Path
The shifting policy outlook is already feeding through to forecasts. Goldman Sachs lowered its expected price path, citing the Fed's more restrictive stance and its effect on investor positioning. The revision touches both the rate environment and investors' willingness to hold gold.
Central Bank Buying: A Floor With Conditions
On the demand side, purchases by official institutions continue to offset the policy headwind. The World Gold Council put central bank net purchases at 321 tonnes in the third quarter of 2026, up 42% year on year and above the five-year quarterly average of 227 tonnes. The organization expects further buying in the final quarter.
Yet the World Gold Council cautions against treating central bank demand as a guarantee of a stable price floor. It describes official buying as price-sensitive: declines can encourage purchases. How durable that support proves therefore depends on whether buyers keep stepping in at weaker quotes.
Saxo strategist Ole Hansen names central bank purchases and fiscal uncertainty as possible long-term props, with falling oil prices potentially helping as well. A recovery, however, would in his view only become sustainable once expectations for US policy shift and the chart picture improves — explicitly tying the long-term arguments to the conditions for a short-term turnaround.
Producer Prices Loom as the Next Test
The pressure was visible in Thursday's session: gold lost 0.8% to $3,953.73 an ounce, its third straight trading day of declines, weighed down by the strong dollar and restrictive Fed signals, Reuters reported. The stronger-than-expected October inflation reading has bolstered expectations of further rate increases, leaving the metal focused on whether additional economic data confirm that path or ease the pressure on the Fed.
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The next key date arrives Friday with US producer prices. OCBC strategist Christopher Wong warns of further pressure on gold if the data come in above expectations. In a less favorable economic environment, he sees heightened downside risk toward $3,870 an ounce.
Two forces are thus pulling in opposite directions: central bank demand argues for longer-term support, while rates and the dollar set the near-term direction. A durable rebound, by Hansen's reckoning, requires Fed expectations to ease and the price to show technical strength at the same time. Until then, structural demand remains a conditional crutch.
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