Gold Prices Plummet as Fed Rate Hike Expectations Rise
Gold prices plummeted by as much as 4% on Monday to about $4,111 an ounce, its lowest level since August 5, despite elevated tensions around Iran and the Strait of Hormuz.
The selloff was attributed to a combination of factors, including higher oil prices that reinforced inflation concerns, increased bets on another Federal Reserve rate hike, and rising Treasury yields.
Safe-haven demand for gold remained a factor, but was outweighed by higher borrowing costs and a firm dollar. The two-year Treasury yield climbed to 4.924%, while the dollar index strengthened as rate expectations turned more hawkish.
The sharp decline in gold prices also spread to other precious metals, with silver falling about 4.7%, platinum losing roughly 2.9%, and palladium dropping about 4.4%.