Gold Prices Decline on Inflation Worries and Rate Hike Expectations

Gold prices declined in early Asian trading on Monday due to rising inflation concerns and expectations of higher interest rates. Spot gold fell 0.2% to $4,368.33 per ounce, while US gold futures for December delivery were down 0.4% at $4,406.70.

The recent tensions in the Middle East have added to inflation worries, and some of the world's top central banks are raising rates to combat inflation fueled by the Iran war. The Bank of Japan became the latest big central bank to tighten its monetary policy on Friday, following rate increases by the Federal Reserve earlier that week and the European Central Bank the week before.

Although gold is often seen as an inflation hedge, rising interest rates tend to reduce demand for it by making interest-bearing assets more attractive. Gold demand in India remained subdued last week as buyers held back purchases in anticipation of lower prices.