Gold Prices Fall as US Inflation Data Raises Rate Hike Expectations

Gold prices fell on Friday as hotter-than-expected US inflation data raised expectations of a Federal Reserve interest rate hike later this week. The core consumer price index, which excludes food and energy costs, rose by 0.3% in August from the previous month.

The latest inflation print puts pressure on the Fed to increase rates when it meets this week, with traders pricing in an approximately 88% chance of a hike in September. Higher borrowing costs typically have a negative impact on gold, which does not pay interest.

However, by tightening monetary policy, the Fed may attract criticism from President Donald Trump, who has repeatedly called for lower rates. Meanwhile, oil prices surged again due to ongoing conflict in the Middle East, adding inflationary pressure.