Gold prices slip as oil-driven inflation fuels Fed rate hike bets

Gold prices fell on Monday as rising oil costs fueled inflation concerns and reinforced expectations of further Federal Reserve interest rate hikes. Spot gold dropped 0.7% to $4,254.77 per ounce, with US gold futures also down 0.7% at $4,289.70. The oil price rebound, driven by geopolitical tensions after US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz, heightened inflation fears. The Fed raised rates earlier this month to between 3.75% and 4%, and traders now price in a 66% chance of another hike in October. Higher energy costs can boost inflation, while rising yields increase the opportunity cost of holding gold. Cleveland Fed President Beth Hammack warned against letting high inflation become the norm, and a survey showed US consumer sentiment fell to a four-month low in September. Other precious metals also declined, with silver down 1%, platinum down 0.7%, and palladium losing 0.7%.