Gold Prices Plummet Amid Rising Rate Hike Odds and Inflation Fears

A stronger-than-expected U.S. inflation report sparked a gold selloff on Monday, with spot prices falling to approximately $4,331 an ounce as investors adjusted their expectations for a potential Federal Reserve rate hike.

The core consumer price index rose 0.3% month on month in August, pushing traders to price in an 88% probability of a rate increase at this week's Fed meeting, according to the latest data cited in gold market coverage.

Rising interest rates typically weigh on gold because it produces no interest or dividend, making yield-bearing assets more attractive. A stronger U.S. dollar index also added downward pressure on gold, while Brent crude climbed toward $107 a barrel due to escalating Middle East tensions.