Gold Prices Plummet as Rate Hike Expectations Soar

Gold and silver prices have taken a hit on Monday morning as rising bond yields and surging energy prices strengthen expectations of a Federal Reserve interest rate hike this week.

The spot gold price fell by nearly 2% to $4,269.90 an ounce, while silver dropped 2.50% to $62.75 an ounce.

Market analysts believe that the recent hotter-than-expected inflation data and elevated energy prices have led markets to significantly increase their expectations for tighter monetary policy.

The latest Consumer Price Index (CPI) showed a 0.4% rise in August, with annual inflation holding at 3.4%, while core CPI rose 0.3%, slightly hotter than economists' expectations.

According to markets, there is now an 87% chance of a 25 basis point interest rate hike by the Federal Reserve on Wednesday, with over 90 basis points of tightening expected in the next year.