Gold has fallen sharply after stronger-than-expected US inflation pushed the dollar and Treasury yields higher and revived expectations of tighter Federal Reserve policy.
Spot gold fell more than 2% to around US$4,052 an ounce after US consumer prices increased 0.4% in October, ahead of the 0.3% expected by economists.
The move has immediate implications for Australian gold stocks, which had benefited from bullion holding above US$4,000 in recent weeks.
Higher bond yields generally reduce the relative appeal of non-yielding assets such as gold, while a stronger US dollar can also weigh on commodity prices.
For Australian producers, however, margins remain historically strong at current bullion levels.
The focus now is whether gold can hold above US$4,000 or whether renewed expectations of further US rate hikes trigger a deeper correction.
