Gold Prices Tumble Amid Rate Hike Fears and Middle East Tensions

Gold prices continued to decline on Monday as investors remained cautious over the possibility of a Federal Reserve interest rate hike later this month. Spot gold fell as much as 1% before holding around $4,400 an ounce, while US gold futures declined 0.6% to about $4,450 per ounce.

The move extended Friday's losses, which were triggered by a stronger-than-expected US jobs report that bolstered expectations of a rate hike at the Fed's upcoming policy meeting. Higher interest rates are typically a headwind for bullion because it yields no interest.

Middle East tensions have also weighed on gold throughout the year by adding to inflationary pressures and strengthening the case for central banks, including the Fed, to maintain tighter monetary policy. Traders are now pricing in around a 60% chance of a rate hike at the Fed's policy meeting next week, up from about 50% before Friday's jobs report.

Investors are now turning their attention to key US inflation data due later this week for further clues on the direction of monetary policy. Some remain bullish on gold as the metal reasserts its traditional role as a portfolio hedge, with Goldman Sachs forecasting bullion could reach $4,900 an ounce by the end of the year.