On Wednesday (November 11) during Asian trading hours, spot gold fluctuated slightly higher, currently trading around $4040 per ounce. On Tuesday, spot gold plunged nearly 3% in a single day, breaking below the key psychological level of $4100, hitting a low of $4013.53 per ounce, a new low in nearly a week. Higher-than-expected US October CPI data, coupled with signals from several Federal Reserve officials suggesting a possible acceleration of interest rate hikes, strengthened the US dollar index and caused a sharp rise in US Treasury yields; with upward revisions to interest rate expectations, gold, as a non-interest-bearing asset, quickly came under pressure. Standard Chartered Bank stated that despite the sharp sell-off triggered by higher-than-expected US inflation data, gold still held the key $4000 per ounce level. The bank said that oil, inflation risks, and the stock market are setting the tone, with traders focusing on the Federal Reserve's December meeting.

Price Reaction: Higher-than-expected CPI triggers nearly 3% sell-off, $4,000 level puts to the test

Spot gold fell nearly 3% on Tuesday, while December futures dropped nearly 2% to around $4,035. Gold prices opened above $4,100 for the first time since October 22, but reversed course after October's consumer price index (CPI) rose 0.4% month-over-month, exceeding the expected 0.3%. The data pushed up the dollar and US Treasury yields, increasing the opportunity cost of holding non-yielding gold. Gold is currently extremely closely tied to interest rate hike pricing—a mere 0.1 percentage point difference in CPI is enough to wipe out gains from the previous few trading days, indicating that its safe-haven appeal has temporarily given way to opportunity cost logic in the face of interest rate shocks.

Interest Rate Expectations: A 25 basis point rate hike in December is fully priced in, with the probability of a 50 basis point hike rising to approximately 10%.

Interest rate expectations shift with data releases. According to CME FedWatch, a 25 basis point rate hike in December is now fully priced in, while the probability of a 50 basis point hike has risen from zero to about 10%. Governor Waller previously stated that a strong CPI reading might lead him to support a larger rate hike. The market has shifted from "whether there will be a rate hike in December" to "how much," and while the 10% probability of a 50 basis point hike is not high, it represents a previously nonexistent tail—if subsequent data continues to be strong, this increased probability will directly suppress gold prices.

Standard Chartered's assessment: Maintain overweight rating, but target price has been lowered.

Standard Chartered's long-term view remains constructive. In a report earlier this month, the bank maintained its overweight position in gold but lowered its three-month target to $4,350 per ounce and its 12-month target to $4,700 per ounce. The bank expects the Federal Reserve to raise interest rates in December and the first half of 2027, bringing the target range to a peak of 4.25% to 4.50%, before easing in the second half of next year. The bank stated that a weaker dollar and continued purchases by emerging market central banks should drive gains over the next 12 months, although rising bond yields and a stronger dollar are recent headwinds. Standard Chartered's bullish logic is based on a "later rather than earlier dollar weakening"—short-term rate hikes and yield pressures are part of the path, not a negation of the trend.

Key support and pattern for the year: $3,886 is the defense line; oil prices and inflation data will determine whether $4,000 can be held.

The bank also highlighted recent downside risks. At the end of October, it warned that gold needed to hold support around $3,886 after falling below $4,000, or it could face a deeper correction. This year's pattern is clear: the Iranian conflict has driven up oil prices, which in turn has driven up inflation and expectations of a Fed rate hike. Gold is struggling under this pressure, rather than rising as a safe-haven asset. With the December decision approaching, oil prices and the next inflation data will determine whether the $4,000 floor can be held. The essence of this pattern is that gold's pricing this year is driven by the chain of "oil prices → inflation → rate hikes," rather than traditional geopolitical safe-haven assets. As long as this chain remains intact, gold's rebound will be constrained by rate hike expectations, while declines will be limited by central bank buying and the psychological barrier of $4,000.

in conclusion

Standard Chartered Bank points out that gold held above $4,000 after falling nearly 3% on Tuesday due to a higher-than-expected CPI, with oil, inflation risks, and the stock market being the three current drivers. October's CPI rose 0.4% month-on-month, higher than the expected 0.3%, pushing up the dollar and yields, increasing the opportunity cost of holding gold. A 25 basis point rate hike in December has been fully priced in, and the probability of a 50 basis point hike has risen from zero to about 10%—this previously non-existent tail is a new pressure on gold prices. Standard Chartered maintains an overweight rating, with three-month and 12-month targets of $4,350 and $4,700 respectively. It expects the Fed to raise rates to a peak of 4.25% to 4.50% before easing in the second half of next year, with a weaker dollar and central bank gold purchases driving gains over the next 12 months. However, the bank also marked $3,886 as a key support level—this year's pattern is "oil price → inflation → interest rate hike" suppressing gold prices, rather than geopolitical risk aversion driving the rise; as the December decision approaches, oil prices and the next inflation data will determine whether the $4,000 floor can be held. (Spot gold daily chart, source: FX678) At 10:25 Beijing time, spot gold was trading at $4040.40 per ounce.