Gold Prices Plummet as Fed Rate Hike Bets Surge

Gold prices took a hit on Monday as market expectations for a US Federal Reserve rate hike grew stronger. The spot price of gold fell 1.3% to $4,292 an ounce, below the critical threshold of $4,300.

The dollar also strengthened to its highest level in over a week, putting additional pressure on bullion buyers using other currencies. This move weighed heavily on gold as it does not generate interest income, making it relatively less attractive compared with interest-bearing assets.

Market forecasts now indicate an 89% probability of a Fed rate hike at this week's policy meeting, up from 67% before last week's inflation data release. Goldman Sachs and HSBC have both predicted a 25 basis point increase in rates.