Gold, silver plunge as hotter U.S. inflation raises prospect of larger Fed rate hike

Precious metals sold off sharply on November 10 after the release of U.S. consumer-price-index figures that came in above market expectations, according to coverage from Reuters and Kitco. Reuters reported that gold fell nearly 3% as the hotter-than-forecast CPI lifted both the dollar and Treasury yields, pressuring non-yielding bullion. Kitco's initial report framed the move as a plunge driven by the prospect of a larger Federal Reserve rate hike, while a subsequent Kitco article noted that gold and silver subsequently rebounded from the CPI-driven selloff as tensions around the Strait of Hormuz lifted crude-oil prices. The sequence shows an initial sharp decline followed by a partial recovery in the same session, with the inflation print acting as the primary catalyst for the selloff and geopolitical risk providing a bid for havens later in the day.

Coverage emphasizes the direct link between the inflation surprise and the repricing of Fed policy expectations. Reuters highlights the nearly 3% drop in gold and the concurrent rise in the dollar and yields, underscoring the sensitivity of precious metals to real-rate movements. Kitco's two pieces bookend the session: the first stresses the plunge and the heightened probability of a more aggressive tightening path, while the second documents the rebound and adds the Hormuz-driven crude rally as a secondary factor supporting a bounce in metals. Both outlets treat the CPI release as the dominant market-moving event, with Kitco explicitly connecting the data to the prospect of a larger Fed rate hike.

The context is a market already attuned to the Federal Reserve's inflation fight, where each CPI print can shift rate-hike probabilities and trigger swift repositioning across asset classes. Gold and silver, which pay no yield, tend to decline when real yields rise and the dollar strengthens, making them especially vulnerable to upside inflation surprises. The Strait of Hormuz tensions introduce a geopolitical risk premium that can temporarily offset rate-driven selling, as seen in the intraday rebound noted by Kitco. Crude oil's rise on supply-risk concerns illustrates how cross-asset dynamics — energy, metals, currencies — interact around major data releases and geopolitical flashpoints.

What to watch next includes the Federal Reserve's policy response at its upcoming meeting, any further revisions to terminal-rate expectations, and the evolution of Middle East tensions that could sustain a haven bid for precious metals. Coverage does not specify the exact magnitude of the CPI surprise, the precise Fed meeting date, or the details of the Hormuz situation, so subsequent data releases, central-bank communications, and geopolitical developments will determine whether the rebound extends or the selloff resumes.