Hotter-than-expected US inflation, hawkish Federal Reserve rhetoric and a surge in Treasury yields drove markets this week, lifting the dollar to a more than one year high and pressuring metals, while crude oil swung sharply on shifting signals from Washington over the Iran conflict.
The dollar index rose above 103 for the first time since April 2025 and closed near 103.4 as hotter-than-expected October inflation pushed Treasury yields above 5 percent and reinforced an already hawkish policy backdrop. Headline consumer prices exceeded forecasts, while core CPI surprised to the upside for a third consecutive month. The broadening of price pressures beyond energy weakened the argument that the Fed could look through inflation as a temporary consequence of the oil shock.
Federal Reserve officials broadly signalled that inflation remained uncomfortably high and that further tightening might be necessary. Futures ended the week pricing an approximately 89 percent probability of a 25-basis-point increase in December and an 11 percent probability of a 50-basis-point move, with the latter up from almost no probability before the inflation data.
Annual PPI accelerated to 6.5 percent, its highest level since November 2022. Nevertheless, US equities recorded their strongest week since August, with the S&P 500, Nasdaq and Dow gaining more than 2 percent as a recovery in technology shares outweighed higher yields and uncertainty surrounding Nvidia.
Spot gold declined approximately 4.6 percent to around $3,880 per ounce, its weakest weekly performance since early June, after touching a fresh one-year low near $3,852. Silver fell about 6 percent and closed below $49 an ounce after reaching a one-year low of $48.46. Gold’s sharpest decline followed the US CPI release. With the 10-year yield moving from below 4.9 percent to 5.17 percent, the opportunity cost of holding non-yielding assets increased materially. The subsequent recovery in crude oil reinforced inflation concerns and limited bullion’s ability to recover. Earlier support from falling oil prices and hopes of progress towards a US-Iran settlement also faded as diplomatic signals became less conclusive.