Gold Falls Over 1% as Inflation Concerns Mount

Gold prices plummeted over 1% on Monday as concerns about inflation and interest rates took hold. The rise in oil prices heightened worries about inflation, leading to expectations of further Federal Reserve rate hikes.

The spot price of gold fell to $4,223.95 per ounce, down 1.5%, while US gold futures dropped 1.5% to $4,257.90. Higher bond yields and oil prices are acting as a major obstacle for gold investors, according to Tim Waterer, chief market analyst at KCM Trade.

The recent rate hike by the Fed has already lifted its target rate range to between 3.75% and 4%, with traders pricing in a 66% chance of another rate hike in October. This high-interest environment increases the opportunity cost of holding gold, which is non-yielding.