LONDON: Gold prices fell on Monday as prospects of a US Federal Reserve interest rate hike this week grew after strong inflation statistics and rising oil prices. Spot gold was down 1.2 percent at $4,296.68 per ounce at 1216 GMT, following a third consecutive weekly fall on Friday. US gold futures fell 1.7% to $4,335.40.
The dollar reached a one-week high, making greenback-priced bullion more expensive for holders of different currencies. Markets have fully priced in a Fed rate hike following last week’s CPI report. At the same time, the continuing rise in oil prices may exacerbate inflation fears and keep the Fed on a hawkish stance,” said UBS analyst Giovanni Staunovo.
In August, US consumer prices increased, and a key measure of underlying inflation saw its highest gain in four months, supporting expectations for US rate hikes. Traders expect an 89 percent chance of a rate hike at the central bank’s policy meeting this week, up from 67 percent before the inflation report last week, according to the CME FedWatch Tool.
Goldman Sachs and HSBC expect the Fed to raise interest rates by 25 basis points during its policy meeting on Tuesday and Wednesday. The Bank of Japan is anticipated to hike interest rates on Friday, as energy prices rise and Middle East tensions remain high.
Also Read:
Gaza Humanitarian Crisis: UNICEF Reports 300 Children Killed in 300 Days
Why the US Launched Retaliatory Strikes on Iran: Causes and Consequences
