September inflation ran hotter than forecast, and precious metals took the hit. The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index rose 0.6% in September and 3.7% over the past 12 months, above the 3.6% consensus. Spot gold fell 1.7% to $4,086.06 an ounce and silver dropped 4.1% to $56.99 as traders priced in a higher chance the Federal Reserve raises rates again this month.
Gasoline Did More Than Half the Work
The gasoline index rose 9.1% in September, "accounting for over half of the monthly all items increase," according to the BLS release. Gasoline is up 34.2% over 12 months; the broader energy index gained 5.2% on the month and 20.4% on the year.
Away from the pump, the data looks far less alarming. Core CPI, which excludes food and energy, rose 0.3% in September and 2.6% over 12 months — above the 2.5% estimate but still within shouting distance of the Fed's target. Shelter increased 0.4% on the month and 3.2% on the year. Food was unchanged in September, with groceries down 0.1% and restaurant prices up 0.2%.
That split is the whole argument at the Fed right now: an energy shock that is enormous in the headline and only modestly visible in the core.
The Rate Math Turned Against Metals
Markets did not split hairs. Odds of a quarter-point increase at the Oct. 27-28 meeting jumped to 44% from 22% before the release, according to Reuters, while the probability of a hike by December reached 95%. The dollar index gained 0.4% and the 10-year Treasury yield climbed to about 5.29%.
All three of those move against bullion, which pays no interest and is quoted in dollars. "The hotter-than-expected inflation data put pressure on gold as the dollar rose," said David Meger of High Ridge Futures.
The selling was broad across the complex. U.S. gold futures fell 1.6% to $4,108.60. Platinum lost 2% to $1,629.79 and palladium slipped 0.7% to $1,118.46. Silver's 4.1% slide — more than double gold's decline — reflects its industrial exposure; roughly 58% of global silver demand comes from manufacturing rather than investment, which makes it more sensitive to the growth implications of tighter policy. On Wednesday's quotes, the gold-silver ratio sat near 72, up from 70.78 earlier in the session, per FXStreet data.
A Long Way From January
Wednesday's move extends what has become a punishing year for gold bulls who bought the top. The metal's record close of $5,589.38 was set on Jan. 28 during U.S.-Iran war fears and a Fed on hold. At $4,086, gold trades roughly 27% below that peak, and Wednesday marked a third consecutive losing session.
Fed commentary offered little support. New York Fed President John Williams told Bloomberg on Oct. 13 that "my view that it may be appropriate to raise rates one more time has not changed," while adding, "at this point, I don't see a reason to believe that further rate increases will be needed after that." He expects tariff and energy pressures to fade and inflation to approach 2% next year.
Equities were mixed in Wednesday trading. The Dow Jones Industrial Average edged up 23 points to 51,693, while the S&P 500 fell 0.6% to 7,759 and the Nasdaq Composite lost 0.8% to 26,988. Bank of America dropped more than 8% after a third-quarter earnings miss and a $1.2 billion regulatory penalty.
Sources: Bureau of Labor Statistics (September 2026 CPI news release), Reuters via Rallies, Yahoo Finance live market blog, FXStreet, Bloomberg, EconoTimes