Gold Prices Plummet Amid Oil-Driven Inflation Concerns

Gold prices dipped on Monday due to concerns about inflation fueled by rising oil prices. The US Federal Reserve's policy meeting this week is also expected to lead to a rate hike, which would decrease gold's appeal to investors.

The price of spot gold fell 0.5 percent to $4,327.80 an ounce as of 0119 GMT, while US gold futures for December delivery dropped nearly 1 percent to $4,368.60. Traders are pricing in about an 86 percent chance of a rate hike at the Fed's meeting on September 15-16.

The jump in oil prices was driven by fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf, which compounded supply concerns following the closure of a key Saudi oil pipeline. Middle East diplomacy appeared to falter after a meeting between Iran and other Gulf states was postponed.

Goldman Sachs still sees upside risk to its forecast for gold to reach $4,900 an ounce by the end of 2026, although it expects price volatility to remain elevated.