Gold Prices Dip as Strong US Inflation Data Boost Rate Hike Bets

Gold prices edged lower on Monday after hotter-than-expected US inflation data raised bets that the Federal Reserve will hike interest rates later this week.

The core consumer price index, which excludes food and energy costs, rose 0.3% in August from a month earlier, according to data released on Friday.

This increase piles pressure on the Fed to make its first rate hike in three years when it meets this week. Traders are pricing in a roughly 88% chance of an increase in September.

Higher borrowing costs typically have a negative effect on gold, which does not pay interest.