Gold Slumps Amid Bets on Further Rate Hikes

Gold prices have dropped to their lowest levels since early August as investors reassess their expectations for US monetary policy. The metal's decline comes despite escalating geopolitical tensions, which typically drive demand for gold as a safe haven.

The drop was largely driven by rising energy costs and inflation fears, which are prompting the Federal Reserve to maintain a tight monetary policy stance. The Fed had already raised its target interest rate range to between 3.75% and 4.00% earlier this month, and markets are pricing in a 66% probability of another rate increase in October.

The strong US dollar is also weighing on gold prices, as rising yields on US Treasury bonds make non-yielding assets like gold less attractive. This dynamic has pressured the metal multiple times this year, particularly when Brent crude surpassed $90 per barrel.