Assets that pay no interest took the hit when the inflation report raised the odds of higher US rates.
What moved
- Gold: fell about 2.6% on the day, then recovered to around $4,031 in early trading, according to DailyForex. It had been back above $4,100 ahead of the CPI release.
- Bitcoin: fell to a two-month low below $73,000.
- Brent crude: rose about 0.7% to $92.16 after touching $89.16 overnight.
Levels traders are watching in gold
- Support: $4,000, a round number that is also the level DailyForex flags as key.
- Resistance: around $4,200.
Why rate hike bets hit gold and bitcoin
Gold and bitcoin pay no yield. When rate expectations rise, bonds and cash look more rewarding by comparison, and a stronger dollar makes dollar-priced assets costlier for foreign buyers. Neither link is guaranteed, and both assets can move for other reasons.
What to watch next
- Fed commentary on the size and timing of the next hike.
- Treasury yields and the dollar index.
- Whether gold holds $4,000 on a closing basis.
FAQ
Why did gold fall when inflation rose? Because the market focused on what the Fed might do about it. Higher expected rates and a stronger dollar outweighed gold’s inflation-hedge appeal in this instance.
What is a support level? A price area where buyers have previously stepped in. It can fail.
Is this a good time to buy gold or bitcoin? This article doesn’t offer a view. Prices are volatile.