Gold Prices Plummet Amid Rising Rate Hike Bets
Gold prices slid on Monday as investors anticipate a potential interest rate hike by the US Federal Reserve this week. The Fed's policy meeting is scheduled for Tuesday and Wednesday, and markets are now pricing in an approximately 89% chance of a rate increase, up from around 67% prior to last week's inflation data.
The recent surge in oil prices has also stoked inflation concerns, with US consumer prices accelerating in August. Major banks such as Goldman Sachs and HSBC now expect the Fed to raise interest rates by 25-basis-points at its policy meeting this week.
As a result, gold's appeal as an inflation hedge is being diminished due to higher interest rates. Spot gold was down 0.9% at $4,308.24 per ounce, while US gold futures dropped 1.4% to $4,348.50.