Gold Prices Tumble Amid Rising US Inflation and Fed Rate Hike Odds

The price of gold dipped following a stronger-than-expected US inflation reading, which boosted the likelihood of a Federal Reserve rate increase this week. The core consumer price index rose 0.3% in August from the prior month.

This has traders assigning an 88% probability to a September move, setting the stage for what would be the first hike in three years. Higher interest rates typically undercut gold because it offers no yield.

The current price of gold hovered around $4,340 per ounce after closing Friday higher but still ending the week down 1.8%. The Bloomberg Dollar Spot Index edged up slightly as oil prices continued to climb, adding to inflation pressure.