What came out on the US. Third-quarter GDP - +3.4% annualized versus the forecast of +3.2% and +2.2% a quarter earlier. The core PCE index (the Fed's preferred inflation gauge) rose to 3.1% year-over-year, in line with expectations. Initial jobless claims for the week to October 24 - 194K versus the forecast of 199K and 195K the week before.
Why gold was sold. A strong economy and inflation above target are an argument not for easing, but for raising the rate. On Wednesday the Fed left the rate unchanged, and its head Kevin Warsh gave no signals for the future. After that, the market priced the probability of a 25 basis point hike at the December 9 meeting at 84%, now - about 81% (Prime Terminal data). Gold pays no interest, so expensive money makes it less attractive.
An unusual detail. The decline was not driven by the dollar: the DXY index that day itself fell 0.18% to 101.96. It was the rate that pressured - the yield on 10-year US Treasuries held near 4.999%, dipping intraday to 4.949%.
What's next. The nearest reference points below are Wednesday's low of $4,025 and last week's low of $3,975, above - $4,100 and $4,200. Next week brings the ISM business activity indices, factory orders, JOLTS job openings and the employment report (NFP). Plus November 3 - the US midterm elections, another source of uncertainty for the metal.
Did you catch this dump from $4,069?
A $50 move in gold within a single session is not a rarity, but an ordinary day after strong data. The question is what lot size you were standing in it with: on a small deposit such a move is closed by an amount you don't feel. The point of prop trading is that the trader passes the selection, while the company provides the trading notional and takes a share of the profit. Before December 9, gold will have more than one such candle - the mechanics are worth understanding in advance.