Gold Price Falls Below $4,100 as Hot US Inflation Revives Fed Rate-Hike Bets

KARACHI: The gold price falls below $4100 an ounce on Wednesday after hotter-than-expected United States inflation data revived bets that the Federal Reserve will raise interest rates again. Spot gold dropped 1.5 per cent to $4,093.03, its lowest since October 7 and its third straight daily loss.

US gold futures for December delivery also slid 1.5 per cent to $4,115.50. The selloff followed a US Bureau of Labor Statistics report showing September consumer prices rose faster than forecast, lifting the dollar and Treasury yields and draining demand for the non-yielding metal.

Why the gold price falls below $4100

Gold is usually an inflation hedge, so hot inflation data might look bullish. It was not. Traders read the data as a signal that the Federal Reserve will keep raising rates, and higher rates make interest-bearing assets more attractive than gold, which pays nothing.

The dollar index rose 0.4 per cent and the 10-year US Treasury yield climbed, making dollar-priced gold costlier for buyers using other currencies.

CME Group’s FedWatch tool puts October hike odds at roughly 35 per cent, up from about 22 per cent before the data. Traders are pricing in a nearly 90 per cent chance of an increase in December.

What the CPI numbers showed

The September CPI rose 0.6 per cent from August, after a 0.4 per cent increase the month before. On an annual basis, headline inflation reached 3.7 per cent, above the 3.6 per cent economists had expected.

Core inflation, which strips out food and energy, rose 0.3 per cent for the second month in a row. Its annual rate quickened to 2.6 per cent from 2.4 per cent in August, beating forecasts of 2.5 per cent.

Federal Reserve Vice Chair for Supervision Michelle Bowman said the central bank had enough time to wait and assess financial markets and the economy after September’s rate increase before deciding on further action. The September move was the Fed’s first hike since 2023 and took the target range to 3.75 to 4.00 per cent.

The next policy meeting is scheduled for October 27-28, and the producer price report due Thursday is the next data checkpoint for markets.

Pakistan angle: 24K gold down Rs 4,746 a tola

The global slide fed straight through to the local market. According to live sarafa data from pakgold.net, the 24-karat Rawa benchmark fell Rs 4,746 per tola on October 14 and stood at Rs 426,603 per tola early on October 15.

A stronger dollar also weighed on the rupee, which held at Rs 276.95 against the dollar on October 14 even as it slid against the pound, euro and riyal. When the dollar firms globally, imported costs rise across the board, and gold buyers in Pakistan feel it twice: once in the world price and once in the exchange rate.

The broader economic backdrop remains in focus in Islamabad. Finance Minister Muhammad Aurangzeb told S&P Global Ratings in Bangkok that Pakistan aims for a double-B credit rating, pointing to a fiscal deficit at a 22-year low and assurances to the IMF that subsidies will stay targeted and budget-neutral. Fuel prices, meanwhile, continue to move under the daily price mechanism.

What to watch next

Analysts say the path from here depends on whether Treasury yields and the dollar keep climbing.

If Thursday’s producer price data also runs hot, October rate-hike bets could firm further and keep bullion pinned below $4,100. Softer data, or a pullback in yields, would give gold room to recover. For Pakistani buyers, the open-market dollar rate and the sarafa premium will decide how much of any world-price rebound reaches local counters.

Frequently asked questions

Why is gold falling when inflation is high?

Because traders expect the Federal Reserve to answer hot inflation with higher interest rates. Higher rates lift bond yields and the dollar, which makes non-yielding gold less attractive.

What is the gold rate in Pakistan today?

On October 15, 2026, the 24K Rawa benchmark stood at Rs 426,603 per tola in the Rawalpindi-Islamabad sarafa market, after falling Rs 4,746 per tola on October 14.

Will gold prices recover soon?

Softer US data could cool rate-hike bets and lift gold; hotter data would keep prices under pressure.

When is the next US Federal Reserve meeting?

The FOMC meets October 27-28, with markets pricing roughly 35 per cent odds of a hike.