Gold drops below $4,200 as oil shock and Fed rate bets hit bullion

Gold prices fell sharply on Monday, dropping below $4,200 per ounce as rising oil prices, a stronger dollar, and higher US bond yields fueled expectations that the Federal Reserve may keep tightening policy. Spot gold traded 2.1% lower at $4,198.10 an ounce, heading for its steepest daily decline since September 1. Higher energy costs are now seen as a reason for the Fed to maintain a hawkish stance, increasing the opportunity cost of holding non-yielding gold. US 10-year yields hovered near 5.2%, close to a 20-year high, while Brent oil climbed above $106 per barrel after President Trump rejected an Iranian proposal to reopen the Strait of Hormuz. The $4,200 level is a key short-term test, with analysts pointing to $4,000 as the next support if weakness persists. Long-term demand remains intact, as gold-backed ETFs saw $18 billion in inflows in August, the second-largest monthly gain on record.