Gold Slumps as Hawkish Central Banks Fuel Higher Interest Rates

Gold prices have plummeted by 3.56% to $4,167 due to growing expectations of a more restrictive monetary policy from major central banks.

The persistent global inflationary pressures are driving central banks towards tighter policies, making government bonds more attractive relative to non-yielding assets like gold.

In the US, market sentiment suggests a further hawkish stance from the Federal Reserve, with a 70% probability of a 25-basis-point interest rate hike to 4.25% at its October meeting and a 58% chance of another increase in December.

These expectations have driven the US Dollar Index (DXY) higher, making gold more expensive for international buyers as it is denominated in US dollars.