On Thursday (November 12), during the US trading session, spot gold fell, hitting a new low for the year, driven by a stronger dollar fueled by expectations of further aggressive interest rate hikes from the Federal Reserve. At the time of writing, spot gold is trading around $3853, a single-day drop of over 3%. The US Dollar Index (DXY), which measures the dollar against six major currencies, is approaching 103.10, its highest level since April 2025. A sell-off in US stocks, coupled with reports of Nvidia CEO Jensen Huang's resignation, further intensified selling pressure on gold. The stock market plunge prompted some investors to sell gold to offset losses in other assets or meet margin calls. Cleveland Fed President Hamak stated on Thursday that monetary policy needs to be restrictive, as rising energy costs are already being passed on to other commodity prices. She said that smaller rate hikes would cause less disruption to the economy, but if the Fed's policy actions lag behind the situation, a larger rate hike would be necessary. Prior to Tuesday's US inflation report, Fed Governor Waller hinted to traders at the possibility of a 50-basis-point rate hike in December. Waller stated that if the October core consumer price index (CPI) rose by "0.3% or higher" month-on-month, then a 50-basis-point rate hike would need to be considered. The released data confirmed this scenario: core CPI rose 0.3% month-on-month, higher than the market expectation of 0.2%; overall CPI rose 0.4% month-on-month, also exceeding the 0.3% forecast. The market has fully priced in a December Fed rate hike. Analysts at MUFG Financial Group noted, "The market has already priced in a 28 basis point rate hike by the Fed in December, and by the next policy meeting in January, the expected hike has reached 43 basis points. This means that even if the Fed only raises rates by 25 basis points in December, the market expects a quick follow-up 25 basis point hike early next year." ING strategists added, "Hawkish statements from Fed officials, coupled with better-than-expected CPI data, continue to benefit the dollar, and the dollar index has now returned to its highs from April 2025's 'Liberation Day' period. The ongoing real yield spread on US Treasury bonds continues to provide strong upward momentum for the dollar. This round of market movement is entirely driven by interest rates, and the current dollar strength relative to its short-term fair value has not yet resulted in an excessive premium." The prospect of rising borrowing costs has diminished the appeal of gold, with investors preferring assets with interest income. Traders will now focus on the Producer Price Index (PPI) to be released on Friday, and several Fed officials will also deliver public speeches for the remainder of the week. Changes in the US-Iran situation are also worth noting. US President Trump posted on a social media platform stating, "We don't need a deal with Iran. That era is over." If the situation escalates further, oil prices may rise again, potentially keeping inflation high for an extended period. Technical analysis: The RSI indicator is weak, and downside risks remain. On the daily chart, spot gold is trading below the lower Bollinger Band (20-period, 2 standard deviations), which now forms immediate resistance around $3865. The Relative Strength Index (RSI) is at 37, below the neutral level of 50 but not yet in oversold territory. The MACD indicator has turned slightly negative, indicating increased bearish momentum. Resistance levels: The first resistance is at the lower Bollinger Band at $3865, followed by the psychological level of $4000. Further up, the middle Bollinger Band at around $4037 and the previous support level at $4150 form further resistance, while the upper Bollinger Band at $4209 presents even higher resistance. Support levels: Initial support is around $3850; a break below this level would target the psychological level of $3800.