Oil Price Surge Drives Gold Down 2.7% Amid Rising Rate Hike Odds

Spot gold prices plummeted by 2.7% to $4,171.85 on Monday, while U.S. futures dropped 2.7% to $4,204.30, hitting its weakest level since early August.

The decline was largely driven by rising oil prices, which have increased the likelihood of a Fed rate hike in October to around 66%, according to market odds.

Historically, expensive energy has been a major contributor to inflation, and if this trend continues, it could lead to higher interest rates and reduced demand for gold as an investment opportunity.

With the current backdrop of high bond yields, a firm dollar, and rising oil prices, safe-haven demand is being outweighed by market forces, leading to a sharp reversal in gold's price.