Gold Crumbles Under Pressure from Higher Oil Prices and Rate Hike Bets

Gold prices plummeted over 2% on Monday as rising oil prices fueled inflation concerns and reinforced expectations of further Federal Reserve interest-rate hikes.

The spot price of gold dropped to $4,198.10 per ounce, its largest daily decline since September 1, while US gold futures fell 2.1% to $4,231.00.

According to Tim Waterer, chief market analyst at KCM Trade, the high bond yields and oil prices are 'a thorn in gold's side'. He noted that mixed signals about oil flows have kept inflation front and centre for investors.

The Federal Reserve raised interest rates earlier this month, lifting its target rate range to between 3.75% and 4%. Traders now price a 68% chance of a US rate hike in October, according to CME's FedWatch Tool.