Gold Slumps Amid Rising Oil Prices and Rate Hike Expectations
Gold prices fell on Tuesday as rising crude oil costs heightened inflation concerns and reinforced expectations of a US rate hike. Spot gold declined by 0.3% to $4,285.91 per ounce at 0015 GMT.
The Federal Reserve is set to announce its policy decision on Wednesday following a two-day meeting, with markets betting heavily that policymakers will lift the benchmark rate to a 3.75-4% range and signal further tightening ahead.
Higher energy costs can fuel inflationary pressures across the economy, making gold less appealing when rates increase as it raises the opportunity cost of holding non-yielding bullion.
The Yemen conflict and concerns over global oil supplies also contributed to rising oil prices, which in turn pushed up benchmark 10-year Treasury yields to 5% for the first time since October 2023.