Gold Prices Slide as Stronger Dollar and Rate Hike Expectations Bite
Gold prices fell in European trading on Monday, resuming losses that had paused for two sessions during a recovery from six-week lows. The precious metal was pressured by a stronger US dollar against a basket of global currencies.
The US Dollar Index rose more than 0.1% on Monday, reflecting renewed strength in the US currency. This made dollar-denominated gold less attractive to buyers holding other currencies.
Minneapolis Federal Reserve President Neel Kashkari said inflation remains far too high and that inflationary pressures have broadened beyond the oil price shock caused by the Iran war.
The probability of the Federal Reserve leaving interest rates unchanged in October fell from 48% to 46%, while the probability of a 25-basis-point rate hike increased from 52% to 54% according to the CME FedWatch Tool. The probability of the Federal Reserve leaving interest rates unchanged in December currently stands at 10%, while the probability of a 25-basis-point increase stands at 90%.