Gold and silver slide after hotter U.S. core inflation report

Spot gold traded near $4,055.30 an ounce, down $84.10, while spot silver was near $51.700, down $1.600. The Labor Department said the consumer price index rose a seasonally adjusted 0.4% in October, above the 0.3% economists expected but below September’s 0.6% increase. Core CPI, which excludes food and energy, rose 0.3%, against forecasts of 0.2%. It has advanced 0.3% in each of the past three months.

The Bureau of Labor Statistics did not release annual inflation rates for October because the federal shutdown prevented collection of comparable consumer-price data. September’s annual headline rate was 3.7%; there is no directly comparable October figure. Monthly data showed shelter costs up 0.3%, accounting for more than 30% of the increase in headline prices. Food rose 0.5%, energy 0.7% and gasoline 1.0%. Used-vehicle prices fell 1.2%, partly offsetting increases elsewhere.

Before the release, futures markets put the odds of a 25-basis-point increase at the Fed’s Dec. 8-9 meeting at about 84%. After the inflation data and hawkish remarks from Federal Reserve Governor Christopher Waller, a quarter-point increase was almost fully priced in, with some probability assigned to a larger move. The 10-year Treasury yield climbed toward 4.94% and the two-year yield toward 4.69%. Higher yields and a firmer dollar weighed on bullion by raising the cost of holding assets that pay no interest.

The figures followed a stronger-than-expected October jobs report: payrolls rose by 165,000 against forecasts of about 65,000, unemployment fell to 4.1% from 4.2%, and average hourly earnings increased 0.4% on the month. August and September payrolls were revised up by a combined 84,000.

Investors are watching Friday’s October producer price index, due at 8:30 a.m. EST, as well as Thursday’s jobless claims and existing-home-sales data and a $42 billion Treasury 10-year note auction Tuesday. Crude also fell amid reduced expectations of immediate U.S. military escalation with Iran: Brent briefly dipped below $90 before trading near $90.50, while WTI was around $85.30.