Gold Prices Plummet on Rising Oil and Inflation Fears

Gold prices declined nearly 2% this week due to surging crude oil and stubborn US inflation, as well as growing expectations of a Federal Reserve rate hike. The MCX gold futures for October slipped 0.08% to ₹1,52,655, while September silver futures declined 0.04% to ₹2,34,886 per kg.

The rise in crude oil prices pushed WTI above $104 per barrel, a gain of around 9.6% over five sessions and nearly 16% over the past month. This increase has strengthened concerns that higher energy costs could keep inflation elevated and force the Fed to maintain a tighter monetary policy.

The US headline inflation increased 0.4% month-on-month and 3.4% year-on-year in August, with energy costs contributing to the increase. Producer inflation also accelerated to 5.4% annually, slightly above market expectations. Following this data, expectations of a rate increase at the September 15-16 Federal Open Market Committee meeting climbed above 70%, according to market participants.