Gold Slides as Oil Fueled Inflation Concerns and Rate Hike Bets Rise

Gold prices fell on Monday as rising oil prices fueled inflation concerns and heightened expectations of a US interest rate hike. Spot gold declined by 0.5% to $4,327.80 an ounce, while U.S. gold futures for December delivery dropped nearly 1% to $4,368.60.

The rally in oil prices, driven by fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf, compounded supply concerns following the closure of a key Saudi oil pipeline.

Despite gold's traditional role as an inflation hedge, higher interest rates tend to diminish its appeal to investors. The CME FedWatch Tool shows that traders are pricing in about 86% chance of a US rate hike at the Federal Reserve's policy meeting this week, up from around 67% prior to inflation data last week.