Gold Tumbles to $4,320 as US Inflation Data and Oil Prices Boost Rate Hike Bets

Gold prices plummeted to around $4,320 in early Asian trading on Friday as investors increasingly bet on a Federal Reserve rate hike. The US Producer Price Index (PPI) rose by 5.4% year-over-year in August, exceeding expectations and reinforcing the case for higher interest rates.

The PPI data suggests that underlying inflation in the US economy has picked up, with rising energy costs playing a significant role, according to Kyle Rodda, senior financial market analyst at capital.com.

With traders pricing in a 70% probability of a rate hike next week, gold is facing selling pressure as higher interest rates typically weigh on the precious metal. The yellow metal's lack of interest-bearing qualities makes it less attractive compared to assets that yield returns.