Gold Prices Plunge Below $4,200 Amid Rising Rate Hike Expectations

Gold prices plummeted on September 28, falling below $4,200 in a single-day drop of over $100. The recent weakness in gold is attributed to a rebound in oil prices and rising expectations of further interest rate hikes by the Federal Reserve.

The price of spot gold (XAUUSD) reached a low of $4,179.42 during the Asian session, indicating that short-term selling pressure on gold has not yet eased. Gold prices had been under continuous pressure last week, falling by over 2% at one point during Monday's Asian session.

The recent drop in gold prices was driven by a rebound in oil prices, which resumed their rise after US President Trump rejected Iran's proposal to reopen the Strait of Hormuz. The uncertainty surrounding Middle East energy supply has kept market concerns alive that US inflationary pressures will be slow to recede.

Meanwhile, Fed officials continued to send hawkish signals, with Cleveland Fed President Beth Hammack stating that inflation risks remain elevated. Fed Governor Michael Barr noted that further policy adjustments may still be needed in the future to control inflation, pushing up U.S. Treasury yields and increasing the opportunity cost of holding non-yielding gold.