Gold Prices Plummet Amid Inflation Concerns and Rate Hike Expectations
Gold prices dipped on Monday as rising oil prices fueled inflation concerns and reinforced expectations of a US Federal Reserve rate hike this week. Spot gold was down 0.5% at $4,327.80 an ounce by 0119 GMT after posting its third consecutive weekly decline on Friday.
The price drop comes despite the fact that gold is often seen as an inflation hedge. However, higher interest rates tend to diminish non-yielding bullion's appeal to investors.
Oil prices jumped over 2% on Monday following fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf, which compounded supply concerns after a key Saudi oil pipeline was closed.
The US consumer price index accelerated in August, while a key measure of underlying inflation posted its largest increase in four months, data showed on Friday. This reinforced expectations that the Fed will raise interest rates this week.