Gold Falls as Inflation Bets Soar Amid Crude Oil Surge

Gold prices plummeted over 1.5% to around $4,320 an ounce on Thursday after the US producer price index (PPI) rose more than expected and crude oil surged above $105 a barrel.

The PPI data showed an annual rate of 5.4%, well above the Federal Reserve's 2% inflation target, fueling bets that the Fed will raise interest rates at its policy meeting next week.

According to the CME Group's FedWatch Tool, traders are now pricing in around a 70% probability of a Fed rate hike next week, up from 62% before the PPI release.

Despite gold's decline, some analysts believe the move is short-term and that the metal will recover in the coming months due to potential de-dollarization and government intervention in bond markets.