Gold Plummets on Soaring Oil Prices, Fed Rate Hike Bets
Gold prices plummeted over 1% on Thursday after robust US inflation data and rising oil prices fueled bets for a Federal Reserve rate hike next week. The spot gold price slipped to $4,349.32 per ounce, while US gold futures fell 1.6% to $4,391.30.
The producer price index data showed a 'bit of a pickup in underlying inflation in the US economy' due to rising energy costs, said Kyle Rodda, senior financial market analyst at Capital.com. The August data revealed that US producer prices increased in line with expectations amid a rebound in the cost of energy products.
The probability of a rate hike next week surged to 70% from 62% before the data, according to the CME FedWatch Tool. This led to the strengthening of the US dollar, making greenback-priced bullion more expensive in other currencies.