Gold Prices Plummet as Hawkish Fed Signals Boost Dollar

Gold prices are plummeting today, falling over 1% as investors react to signals from the Federal Reserve indicating an increased likelihood of rate hikes. This has led to a surge in the US dollar, making gold more expensive for holders of other currencies.

The spot price of gold has dropped by 1.1% to $4,304.89 per ounce, while US gold futures for December delivery are down 0.8% at $4,341.90.

Peter Grant, vice president and senior metals strategist at Zaner Metals, attributes the decline in gold prices to the higher dollar. 'Post-FOMC Fed speak has been fairly hawkish,' he said, adding that the market is building in expectations of at least one more rate hike before the end of the year.

The Federal Reserve's decision to raise interest rates has also led to concerns about inflation, which can reduce the appeal of gold as investors seek safer assets with higher returns. According to CME's FedWatch Tool, traders expect a 53% chance of a rate hike in October and a 91% chance of another hike in December.