Gold Prices Slump on Inflation Concerns and Rate Hike Expectations
Gold prices dipped on Monday as oil-driven inflation concerns weighed on investors' minds. The precious metal's appeal was diminished by higher interest rates, which tend to make non-yielding bullion less attractive.
The spot price of gold fell 0.5% to $4,327.80 an ounce, while U.S. gold futures for December delivery dropped nearly 1% to $4,368.60. This decline comes on the heels of a third consecutive weekly drop in gold prices.
Traders are now pricing in about an 86% chance of a U.S. rate hike at the Federal Reserve's policy meeting this week, up from around 67% prior to inflation data last week. The recent acceleration of U.S. consumer prices and a key measure of underlying inflation has reinforced expectations that the Fed will raise interest rates.
Oil prices jumped more than 2% on Monday after fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf compounded supply concerns following the closure of a key Saudi oil pipeline. This increase in oil prices contributed to inflation concerns, further weighing on gold prices.