Gold Prices Plummet Amid Inflation and Interest Rate Fears

Gold prices plummeted to a three-week low of around $4,304 per ounce on September 2, 2026, marking a four-day losing streak. The drop comes as rising oil prices due to U.S.-Iran tensions intensify concerns about persistent inflation and potential interest rate hikes by the Federal Reserve.

The market is pricing in a higher probability of an interest rate hike during the Federal Reserve's September meeting, with some estimates suggesting a likelihood between 66% and 70%. Higher interest rates are a major negative for gold, which does not pay interest or dividends. When interest rates on assets like government bonds rise, investors often shift their capital away from non-yielding assets like gold to seek better returns elsewhere.

The technical pressure on gold is also evident as it continues to trade below its 200-day moving average. This has led to further selling by technical traders, contributing to the decline in gold prices. The weakness in gold was not isolated, with the broader precious metals sector seeing a general flight from commodity positions.