Gold  falls more than 2% as CPI tops forecasts, lifting dollar and yields

By Vedika Thorat

Nov 10 (Reuters) - Gold prices fell more than 2% on Tuesday after hotter-than-expected US inflation data lifted the dollar and Treasury yields while reinforcing expectations of a bigger interest rate hike from the Federal Reserve this year.

Spot gold was down 2.1% at $4,051.50 per ounce by 9:27 a.m. ET (1427 GMT). US gold futures for December delivery fell 1.34% to $4,059.30 per ounce.

"Both the overall number CPI and the core CPI came in a shade above estimates. All in all, it wasn't as great as the markets were hoping for," said Edward Meir, an analyst at Marex.

The Consumer Price Index rose 0.4% last month after advancing 0.6% in September, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast a 0.3% month-on-month rise.

Bets on a 50-basis point Fed rate hike in December started to build after the inflation print and comments by Fed governor Christopher Waller saying he would support more aggressive action in the event of a too-hot Consumer Price Index report.

The probability of a 25 bp cut is fully priced in, while the possibility of a 50 bp hike rose to around 13.6%, from 0% before the data, according to CME's FedWatch Tool.

The US dollar index .DXY, which measures the greenback against a basket of other major currencies, rose and Treasury yields climbed. USD/ US/

A stronger dollar makes gold more expensive for holders of other currencies, while higher Treasury yields increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.

The Monetary Authority of Singapore said on Tuesday it would launch a vaulting service to hold bullion for foreign central banks and lower taxes on some companies in the gold market as it competes for a bigger slice of the precious metals trade.

Spot silver fell 2.9% to $51.86 per ounce and palladium was down 1.0% at $1,031.20.