Gold drops over 1% as oil-driven inflation boosts Fed rate-hike bets

Gold fell more than 1% on Monday as rising oil prices stoked inflation concerns and reinforced expectations of further Federal Reserve rate hikes, with spot gold down 1.5% at $4,223.95 per ounce. The drop follows the Fed's recent quarter-point rate increase to a 3.75%-4% target range, with traders pricing a 66% chance of another hike in October. Higher energy costs, driven by geopolitical tensions over the Strait of Hormuz, are seen fueling inflation, which raises the opportunity cost of holding non-yielding gold. Investors are watching U.S. labor and inflation data this week, including job openings and the PCE price index, as stronger-than-expected figures could pressure gold further. Cleveland Fed President Beth Hammack also voiced concern about persistently high inflation becoming normalized.