Gold Prices Slump on Hawkish Fed Signals and Rate Hike Odds

Gold prices dropped to around $4,365 in early Asian trading on Tuesday as investors digested the likelihood of further interest rate hikes by the US Federal Reserve. The Fed's hawkish stance weighed heavily on gold, which typically performs poorly when interest rates rise due to its lack of yield-bearing assets.

The Fed has raised interest rates for the first time since 2023 last week, and traders now believe there is a 90.3% chance of another rate hike in December, according to the CME FedWatch Tool.

St. Louis Fed President Alberto Musalem emphasized that additional interest rate increases may be necessary to achieve the central bank's inflation goal, stating that monetary policy may still be stimulating the economy after this month's hike.