Gold traded lower on Monday as investors increased expectations for a Federal Reserve interest rate hike following the latest US inflation data, while a firmer dollar and higher crude oil prices remained in focus.
Spot gold was down 0.4% at $4,331.84 an ounce at 02:28 ET (06:28 GMT), with gold futures falling 0.8% to $4,371.65.
Silver declined 1.0% to $63.88 an ounce, while platinum increased 0.2% to $1,802.94. The US Dollar Index advanced 0.3% to 99.42.
Bullion had declined 1.8% over the previous week, marking its third consecutive weekly loss, despite recording a gain on Friday.
Markets Price Higher Probability of Fed Rate Hike
The US core consumer price index increased 0.3% month on month in August, excluding food and energy prices.
Following the data, markets were pricing an approximately 88% probability that the Federal Reserve would increase interest rates in September. Such a move would represent the central bank’s first rate hike in three years.
Higher interest rates increase the returns available on interest-bearing assets, a factor that can affect demand for non-yielding gold.
The outlook for monetary policy also comes amid continued criticism of the Federal Reserve from US President Donald Trump, who again called for lower interest rates on Sunday.
Middle East Conflict Keeps Energy Prices Elevated
Developments in the Middle East continued to affect energy markets, with Brent crude moving towards $107 a barrel after rising almost 9% in the previous week.
A meeting between Iran and several Gulf countries scheduled for Monday was postponed. The talks were expected to address the establishment of a temporary shipping route through the Strait of Hormuz.
The postponement left uncertainty surrounding efforts to increase shipping through the waterway, while higher oil prices added another factor to the inflation outlook facing central banks.
ANZ Forecasts Three Fed Hikes by March 2027
Gold has remained around the $4,400 level in recent trading after recovering from approximately $4,000 in July.
ANZ expects further monetary policy tightening, forecasting three Federal Reserve interest rate increases of 25 basis points each by March 2027.
The bank expects geopolitical developments in the Middle East and higher energy costs to contribute to inflation. However, it also expects geopolitical uncertainty to continue supporting demand for gold as a safe-haven asset.
ANZ therefore maintained its 12-month gold price target of $5,400 an ounce.
The bank also pointed to recovering gold ETF holdings and speculative positions, as well as institutional demand in China and increased investor participation in India, as factors affecting investment demand for the metal.
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