US consumer prices rose 3.7% in the year to September, above the 3.6% forecast, and Bitcoin and gold fell within minutes. The hotter reading raises the odds of another Federal Reserve rate hike, which would lift borrowing costs.

Core inflation, which strips out volatile food and energy prices, also beat forecasts at 2.6%, against an expected 2.5%. Both measures climbed from August’s readings of 3.4% and 2.4%.

How Bitcoin and Gold Reacted to Hot Inflation Data

Bitcoin (BTC) dropped from about $83,860 to as low as $82,731 in the five minutes after the 8:30 a.m. ET release, Binance data on TradingView shows. It then steadied near $83,125.

Gold fell from $4,153 to $4,117 an ounce in the same window.

US CPI Bitcoin and gold price reaction, 5-minute chart. Source: TradingView

“In response to hotter-than-expected inflation data, gold & silver are following bond prices lower. But inflation will keep heating up as the Fed stays behind the curve. This is bullish for precious metals. When inflation rises faster than nominal rates, real interest rates fall,” Peter Schiff commented.

Higher rates tend to pull money away from assets that pay no interest, such as gold, and riskier bets like crypto. The US dollar already sits near an 18-month high.

The Consumer Price Index (CPI) tracks what households pay for everyday goods and services. The Bureau of Labor Statistics (BLS) publishes it every month. In August, gasoline cost 27.4% more than a year earlier, BLS data shows.

Core inflation shows whether rising prices are spreading beyond fuel and groceries. That is the measure the Federal Reserve watches most closely when setting interest rates.

Will the Fed Raise Rates Again in October?

The Fed raised its benchmark rate by a quarter point in September, to a range of 3.75% to 4.00%, according to its statement.

September’s report was the last major inflation reading before the Fed meets on October 27 and 28. Before the release, rate futures pointed to a hike in December rather than October.

New York Fed President John Williams said this week he still expects one more rate hike before the year ends.

Whether the Fed moves in October or waits until December now sets the cost of money for borrowers, savers, and investors heading into 2027.

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