NEW YORK — Gold prices fell Monday as a rise in oil prices heightened concerns about inflation and prompted investors to increase bets on another U.S. Federal Reserve interest-rate hike.
Spot gold was down 0.5% at $4,327.09 per ounce by 0528 GMT, while U.S. gold futures dropped 0.9% to $4,367.50. The decline followed gold’s third straight weekly loss on Friday.
The increase in energy prices has added uncertainty to the outlook for monetary policy. Markets are now pricing in an approximately 87% probability that the Federal Reserve will raise interest rates at its Tuesday and Wednesday meeting, up from about 67% before the latest U.S. inflation data was released.
U.S. consumer prices accelerated in August, while a key measure of underlying inflation recorded its largest increase in four months.
Higher interest rates can pressure gold prices because bullion does not provide interest income, reducing its appeal compared with assets that pay interest.
The Bank of Japan is also expected to increase rates later this week, reinforcing expectations that major central banks could pursue tighter monetary policy.
Geopolitical uncertainty, however, may continue to support gold as investors look for protection from market risks.
Other precious metals also declined. Spot silver fell 1% to $63.80 an ounce, platinum lost 0.2% to $1,792.59 and palladium dropped 0.4% to $1,293.86.
Gold is consequently being pulled in opposing directions, with geopolitical risks supporting demand while higher energy costs and stronger expectations for interest-rate increases weigh on the metal.
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