Gold Prices Tumble as Oil Surge Fuels Inflation Fears Ahead of Fed Meeting
Gold prices declined ahead of the US Federal Reserve's policy meeting on September 15-16. The drop in gold prices comes as rising crude oil prices fuelled inflation concerns. Brent crude futures rose 2.30% to $107 a barrel, while US West Texas Intermediate (WTI) crude futures gained 2.36% to $102.40 a barrel.
The rise in oil prices was due to fresh attacks in West Asia, adding to concerns over global crude supplies. A planned meeting between Iran and other Gulf countries was postponed, further raising uncertainty over efforts to ease tensions in the region.
Markets are now pricing in an 86.7% probability of a rate hike at the Fed's September 15-16 meeting, according to the Chicago Mercantile Exchange’s (CME) FedWatch Tool. The rise in crude oil prices has added to concerns that inflation could remain elevated in the US, making it harder for the Fed to ease monetary policy.