Gold Prices Plummet Over 2% as Oil Surges Amid Inflation Fears

Gold prices plummeted on Monday, declining more than 2% as concerns about inflation rose due to surging oil prices. The surge in oil prices followed US President Donald Trump's rejection of an Iranian proposal linked to reopening the Strait of Hormuz.

Oil prices jumped over 1%, with Brent crude futures reaching $106.50 a barrel. This increase has renewed worries about inflation, which could make it harder for the Federal Reserve to ease monetary policy.

Higher interest rates typically weigh on gold, making the non-yielding asset less attractive compared to interest-bearing investments. 'High bond yields and high oil prices continue to weigh on gold,' said Tim Waterer, KCM Trade chief market analyst.