Fed tightening bets weigh on gold prices
GLD•Spot gold fell 0.7% to $4,254.77 an ounce as higher oil prices heightened inflation concerns and reinforced expectations of further Federal Reserve rate hikes. Traders priced in a 66% chance of a US rate hike in October.
1. Gold and other metals fall
Spot gold was down 0.7% at $4,254.77 per ounce as of 0010 GMT, while US gold futures fell 0.7% to $4,289.70. Spot silver fell 1% to $63.67, platinum slipped 0.7% to $1,765.28 and palladium lost 0.7% to $1,257.70.
2. Oil and rate expectations
Oil prices rebounded more than 1% as inflation concerns rose, reinforcing expectations of further Federal Reserve rate hikes. The Fed raised its target rate range by a quarter percentage point earlier this month, to 3.75%-4%; CME's FedWatch Tool showed traders pricing in a 66% chance of a US rate hike in October.
3. Inflation concerns persist
Higher energy prices can raise costs across the economy. Gold is widely viewed as an inflation hedge, but can struggle when interest rates are high because rising yields increase the opportunity cost of holding the non-yielding metal. Cleveland Fed President Beth Hammack said Friday she was concerned that persistently high inflation could condition the public to accept elevated prices. A survey showed US consumer sentiment fell to a four-month low in September amid worries about inflation eroding purchasing power.
