Gold Price Drops Amid Rising Odds of December Rate Hike
The price of gold (XAU/USD) dropped to near $4,365 in early Asian trading on Tuesday, snapping its two-day winning streak. The decline is linked to rising expectations of a further interest rate hike by the US Federal Reserve.
Hawkish signals from Fed officials over potential future interest rate increases weighed on gold prices. Last week, the central bank raised rates by 0.25% to the 3.75%-4.0% range, and traders now expect nearly a 90.3% chance of another hike in December, according to the CME FedWatch Tool.
St. Louis Fed President Alberto Musalem said on Monday that additional interest rate increases may be necessary to achieve the central bank's inflation goal. He emphasized that monetary policy might still be stimulating the economy after this month's hike.