Gold drops more than 2% on US rate-hike bets
GLD•Spot gold fell 2.1% to $4,198.10 an ounce as higher oil prices heightened inflation concerns and reinforced expectations of further Federal Reserve rate hikes. Spot silver dropped 3.4% to $62.08 an ounce.
1. Gold prices fall
Spot gold was down 2.1% at $4,198.10 per ounce on Monday, on track for its biggest daily decline since September 1. U.S. gold futures fell 2.1% to $4,231.00.
2. Rates and inflation
Higher oil prices heightened inflation concerns and reinforced expectations of further Federal Reserve rate hikes. Traders priced in a 68% chance of a U.S. rate hike in October after the Fed raised its target range by a quarter percentage point earlier this month, to between 3.75% and 4%. Higher interest rates increase the opportunity cost of holding non-yielding gold.
3. Other metals decline
Investors are watching U.S. labor-market and inflation data due this week, including job openings, the ADP employment report, the PCE price index and nonfarm payrolls. Spot silver fell 3.4% to $62.08 an ounce, platinum declined 2.7% to $1,730.78 and palladium lost 2.8% to $1,231.46.
