Gold Tumbles as Oil Rally and Inflation Data Boost Rate-Hike Bets
Gold prices plummeted to over one-month lows on Monday, as rising oil prices and stronger-than-expected inflation data bolstered expectations of a rate hike at the US Federal Reserve's policy meeting this week.
The Consumer Price Index increased by 0.4% last month, surpassing July's 0.1% rise, according to the Bureau of Labor Statistics. This has led economists polled by Reuters to predict a 93% chance of a rate hike at the Federal Reserve's policy meeting.
Jim Wyckoff, a market analyst at American Gold Exchange, attributed the decline in gold prices to higher crude oil prices driving inflation expectations and suggesting that major central banks will tighten monetary policies. This is bearish for metals, as higher interest rates reduce the appeal of non-yielding bullion.