Gold Prices Plummet Amid Rising Rate Hike Expectations
Gold prices plummeted nearly 3% over the week as investors weighed in on the US Federal Reserve's potential interest rate hike. The precious metal initially gained support from a weaker US dollar and safe-haven buying, but escalating tensions with Iran pushed crude oil prices higher, fuelling concerns over inflation.
The possibility of a US Fed rate hike strengthened after stronger-than-expected US employment data on Friday lifted the dollar and Treasury yields. This weighed heavily on gold prices, which were already under pressure from rising crude oil prices.
However, bullion recovered somewhat during the middle of the week after weaker US labour data and dovish Federal Reserve commentary raised hopes of a softer monetary policy stance. The recovery proved short-lived as stronger-than-expected US employment data again lifted the dollar and Treasury yields.