Gold slips as oil rally fans rate-hike bets ahead of Fed meeting
GLD•Other precious metals also decline
Oil prices jumped more than 2% on Monday after fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf compounded supply concerns following the closure of a key Saudi oil pipeline.O/R
Middle East diplomacy appeared to falter after a meeting between Iran and other Gulf states was postponed.
Among other metals, spot silver XAG= slid 1.3% to $63.63 per ounce, platinum XPT= dipped 0.4% to $1,789.35, and palladium XPD= also fell 0.4% to $1,293.46.
Gold eases as oil surge lifts rate-hike expectations
Gold prices eased on Monday as a surge in oil prices fuelled inflation concerns, boosting expectations that the U.S. Federal Reserve may raise interest rates at its policy meeting this week.
Spot gold XAU= was down 0.6% at $4,321.26 per ounce by 0724 GMT, after posting a third consecutive weekly decline on Friday. U.S. gold futures GCcv1 dropped 1.1% to $4,361.20.
"Gold isn't finding conditions to its liking. Rising energy prices plus climbing rate expectations ahead of the Fed and BoJ meetings are delivering a clear yield headwind for gold," said Tim Waterer, chief market analyst at KCM Trade.
"In the meantime, dips should still find buyers as an uncertainty hedge while geopolitics and rate policy remain fluid."
Inflation data and oil prices support expectations of higher rates
Reinforcing expectations that the Fed will raise interest rates, data last week showed U.S. consumer prices accelerated in August, while a key measure of underlying inflation posted its largest increase in four months.
Traders are pricing in about an 87% chance of a rate hike at the central bank's policy meeting on Tuesday and Wednesday, up from about 67% prior to the inflation data last week, according to the CME FedWatch Tool.
