|
Gold falls to one-month low as rate-hike bets increase
Gold fell to a one-month low on Monday as rising oil prices and stronger-than-expected inflation data released on Friday reinforced expectations that the US Federal Reserve will raise interest rates at its monetary policy meeting this week.
In trading, spot gold fell 1.8% to $4,271.59 an ounce, its lowest level since August 7, while US gold futures dropped 2.2% to $4,311.20.
Potential rate hike
A majority of economists polled by Reuters expect the Federal Reserve to raise interest rates on Wednesday and deliver at least one additional increase by the end of March, marking a shift from a fragile consensus favoring no change in rates before official data released on Friday showed inflation remained strong.
The US Consumer Price Index rose 0.4% last month after increasing 0.1% in July, according to the US Labor Department’s Bureau of Labor Statistics on Friday.
Markets are currently pricing in around an 89% probability of a rate hike at the Federal Reserve’s monetary policy meeting, according to the CME FedWatch Tool.
The Bank of Japan is also expected to raise interest rates on Friday amid higher energy prices and few signs that tensions in the Middle East are easing.
Although gold is traditionally viewed as a hedge against inflation, higher interest rates tend to reduce the appeal of the non-yielding precious metal.
Oil prices rose around 4% on Monday following fresh strikes targeting energy facilities and civilian infrastructure in Saudi Arabia, along with Iranian attacks on vessels in the Gulf, intensifying supply concerns after a major Saudi oil pipeline was shut down.
Diplomatic efforts in the Middle East also appeared to be faltering, with a meeting between Iran and other Gulf powers postponed.
The US dollar also climbed to a two-week high, making dollar-denominated gold more expensive for holders of other currencies.
Among other precious metals, spot silver fell 2.5% to $62.88 an ounce, platinum declined 2% to $1,759.87, while palladium slipped 0.6% to $1,291.50.
Thanks for your feedback.
Why is it so difficult for tech companies to rein in AI?
More than a dozen leading artificial intelligence researchers warned over the past week that the technology being developed by AI companies is becoming a risk to humanity. The researchers said the problem is that companies are not good at controlling these systems, no matter how hard they try.
MoreCanadian dollar hits 12-day low as inflation data match expectations
The Canadian dollar fell to a 12-day low against its US counterpart on Monday, while bond yields rose after domestic inflation data came in line with expectations and the US dollar posted broad gains ahead of the Federal Reserve’s interest rate decision this week.
More10-year US Treasury yield rises above 5% for first time in three years
The yield on the 10-year US Treasury note rose on Monday, extending gains for a sixth consecutive session and hitting a fresh three-year high, breaking above the 5% threshold for the first time since October 2023.
More