Gold Prices Plummet Below $4,300 Amid Rate Hike Fears

Gold prices have taken a significant hit in recent weeks, falling below $4,300 after a nearly 9% decline from its late-August highs. The retreat is largely attributed to rising US Treasury yields and heightened geopolitical tensions in the Middle East.

The primary driver of this price adjustment is the outlook for US interest rates, with markets currently pricing in a roughly 70% probability of an interest rate hike from the Federal Reserve this month. This has made non-yielding assets like gold less appealing to investors, who are increasingly drawn to higher-paying alternatives such as US 10-year Treasury yields.

Adding to the uncertainty is the ongoing military conflict between the US and Iran, which has caused a spike in crude oil prices and fueled concerns about persistent inflation. Higher inflation often forces central banks to maintain a restrictive monetary policy stance, keeping downward pressure on gold prices.