Gold Prices Plummet as Fed Rate Hike Expectations Soar

Gold prices dipped on Tuesday due to a stronger US dollar and higher Treasury yields. The metal was pressured by rising oil prices, which fueled inflation worries and boosted expectations of an interest rate hike this week.

The spot gold price fell 0.3% to $4,285.88 per ounce as of 9:23 a.m. EDT, while US gold futures dropped 0.6% to $4,325.80.

According to Daniel Pavilonis, senior market strategist at StoneX, 'Higher energy prices cause more inflation. More inflation could cause higher interest rates. That's not good for gold ... gold is in kind of a range-bound area. It could actually sell off more if rates continue to move higher.'

The Federal Reserve's rate decision, due on Wednesday, has traders bracing for a quarter-point hike in the benchmark overnight interest rate to 3.75%-4.00%.