Gold Prices Tumble as Fed Rate Hike Expectations Soar

Gold prices continued to decline on Friday as concerns about the Federal Reserve's interest rate policy weighed on investors.

The spot price of gold fell 0.2% to $4,270.83 per ounce by 0425 GMT, with a weekly loss of over 2%. US gold futures edged 0.2% higher to $4,305.10, but the dollar was headed for a weekly gain.

The stronger dollar makes greenback-priced metals more expensive for holders of other currencies, while US Treasury yields extended gains.

Analysts pointed out that expectations of higher-for-longer interest rates are strengthening the dollar and hurting gold prices. The market is currently pricing in a nearly 69% probability of a US rate hike in October, according to CME's FedWatch Tool.

Despite gold being traditionally seen as a hedge against inflation, higher rates can curb its demand by increasing the appeal of yield-bearing assets.