Gold slides as U.S. inflation data boosts rate-hike bets

Gold prices fell on Friday, adding to the weekly decline, as a hotter-than-expected U.S. inflation reading cemented bets of another hefty Federal Reserve interest rate hike next month.

Spot gold fell 0.3% to $1,660.10 per ounce, as of 0123 GMT.

U.S. gold futures dropped 0.6% to $1,666.80.

The dollar index was down about 0.1%, while benchmark U.S. 10-year Treasury yields were slightly off a 14-year peak touched on Thursday.

Data released on Thursday showed U.S. consumer prices increased more than expected in September, as rents surged by the most since 1990 and the cost of food also rose, with core CPI jumping 6.6% on an annual basis.

The Fed is seen delivering another large rate hike in three weeks’ time and ultimately lifting rates to 4.75%-5% by early next year, if not further, after the inflation report.

Although traditionally considered an inflation hedge, interest rate hikes to combat soaring prices have reduced bullion’s appeal since it yields no interest.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.12% to 944.31 tons on Thursday.

Barrick Gold Corp, the world’s second-largest gold miner, said on Thursday it expected full-year gold production to be at the lower end of its earlier forecast range.

Spot silver dipped 0.3% to $18.81 per ounce, platinum fell 0.5% to $891.67 and palladium was 0.3% lower at $2,101.77.