Gold Prices Plummet Amid Rising Fed Rate Hike Bets

Gold prices plummeted by 4.2% to $4,163 as market expectations of another US Federal Reserve rate hike and a stronger US dollar weighed heavily on precious metals. The sharp change in interest rate expectations pushed Treasury yields higher and supported the dollar.

The US Fed had raised its policy rate by 25 basis points to 3.75%-4.00% in the previous week, with 16 of the 18 policymakers indicating they expected at least one more rate hike this year.

By September 29, markets were pricing in around a 71% chance of another rate hike in October, according to Kedia Advisory. The US dollar index moved closer to 101, while the US 10-year Treasury yield climbed above 5.20%, making interest-bearing assets more attractive compared with gold and silver.

Higher crude oil prices also added to inflation concerns, further pressuring precious metals. Brent crude was trading around $109 a barrel on September 29 before easing later.