Gold Drops as US Inflation Data Bolsters Fed Stance

Gold prices closed Tuesday's session down 2.04 percent on the New York exchange. The precious metal reached a value of 4,030.2 dollars per troy ounce. Silver followed the downward trend and fell 2.79 percent during the same period.

The decline occurred following the release of the United States consumer price index. The result exceeded analyst projections and showed higher-than-expected core inflation figures. This scenario pressured metal futures throughout the session.

Data from Bank of America suggest that US inflation has lost the disinflationary momentum observed at the beginning of the year. The report highlights that a larger share of the categories making up the index is showing growth above historical averages. This price behavior alters the pricing dynamics in the financial market.

Expectations regarding Federal Reserve monetary policy shifted drastically after the data release. The market now considers a December rate hike a certainty. There is also the possibility of a more aggressive 50 basis point adjustment as mentioned by the institution's officials.

In parallel, the Monetary Authority of Singapore launched a custody service for storing gold from foreign central banks. The measure seeks to decentralize the storage of the metal which is currently concentrated in North America and Western Europe.