Oil Price Surge Sends Gold Prices Plummeting to Seven-Week Low
The price of gold plummeted by 3% on Monday, hitting a seven-week low. This decline was largely driven by rising oil prices, which have increased inflation concerns and strengthened expectations that the Federal Reserve will maintain or even raise interest rates.
According to UBS Group analyst Giovanni Staunovo, 'Rising oil prices, along with market participants increasing their bets on further U.S. interest rate hikes, are the primary drivers behind gold's recent weakness.' He added that this backdrop could keep US real interest rates and the dollar at elevated levels, making it more expensive for investors to hold non-yielding assets like gold.
Spot gold prices fell by 3% during the European trading session, trading at $4,157 per ounce. December gold futures in the United States dropped 3.1%, settling at $4,188.80 per ounce.