Gold Prices Tumble on Inflation Concerns and Rate Hike Expectations

Gold prices took a hit on Monday as concerns about inflation and further interest rate hikes by the Federal Reserve weighed heavily on markets.

The Fed raised its target rate range to between 3.75% and 4% earlier this month, and traders are now pricing in a 66% chance of another rate hike in October, according to CME's FedWatch Tool.

Higher energy prices can fuel inflation by raising costs across the economy, which is bad news for gold as it struggles in high interest rate environments where rising yields increase the opportunity cost of holding non-yielding metals.

Cleveland Fed President Beth Hammack expressed concerns that persistently high inflation could condition the American public to accept elevated prices as the norm, and she emphasized that the central bank cannot let this happen.