Gold gains after steep drop, but hawkish central bank signals weigh

By Sherin Sans

Nov 11 (Reuters) - Gold prices climbed on Wednesday, but remained anchored near the $4,000 level after a sharp selloff in the previous session following a hot US inflation print and hawkish policymakers' comments that tilted market expectations towards further and larger rate hikes.

Spot gold rose 0.5% to $4,051.31 per ounce by 0916 GMT after dropping as much as 3% to $4,013.29 on Tuesday. US gold futures for December delivery gained 0.7% to $4,059 per ounce.

"Gold is seeing some slight relief after its post-CPI declines," said Han Tan, chief market analyst at Bybit.

"However, it's a tough ask for gold bulls to keep pushing prices higher, given the prospects of more Fed rate hikes in the pipeline."

Data released on Tuesday showed US consumer prices rose more than expected in October, with the CPI increasing 0.4%. Economists polled by Reuters had forecast a 0.3% rise.

Traders raised the odds of a December Federal Reserve rate hike to 100% from 84% before the data, as per CME's FedWatch tool. Expectations of a larger, half-percentage-point hike also increased.

Ahead of the data, Fed Governor Christopher Waller said a core inflation reading of 0.3% in October would prompt him to consider a half-point hike at the December meeting.

Other policymakers also maintained a hawkish tone, with Fed Bank of Philadelphia President Anna Paulson signalling further US rate hikes and Fed Vice Chair for Supervision Michelle Bowman reaffirming the central bank's focus on curbing price pressures.

Although gold is typically seen as an inflation hedge, higher interest rates diminish its appeal, as gold bullion pays no interest.

Among other metals, spot silver climbed 2.7% to $52.87 per ounce, and palladium gained 4.1% to $1,066.66 per ounce.