Gold Drops 3% to Seven-Week Low as Higher Oil Fuels Rate-Hike Bets

NEW YORK — Gold prices dropped 3% on Monday, hitting their lowest level in more than seven weeks as rising oil prices heightened inflation concerns and boosted expectations that US interest rates could remain elevated.

Spot gold fell 3% to $4,156.45 an ounce at 0814 GMT, its lowest level since August 5. US gold futures for December delivery declined 3.1% to $4,188.80.

A stronger dollar and higher US Treasury yields also pressured bullion. The firmer dollar makes gold more expensive for buyers using other currencies, while higher yields increase the opportunity cost of holding an asset that does not generate interest.

According to CME’s FedWatch Tool, markets were pricing in a 70.3% probability of a Federal Reserve rate hike in October.

Other precious metals also moved lower. Silver declined 4.8% to $61.17 an ounce, while platinum dropped 2.4% to $1,735.88 and palladium fell 2.2% to $1,239.60.

Investors are now focused on several US economic reports scheduled for release this week, including inflation, employment and payroll data, which could provide additional clues about the Federal Reserve’s interest-rate path.