Gold falls to more than two-week low as oil rally fuels inflation worries
Gold prices dropped to a two-week low as rising oil prices fueled inflation concerns and expectations of further Federal Reserve interest rate hikes. Analysts suggest that the potential for tighter monetary policy continues to weigh on the non-yielding asset.
Why it matters
Gold is a traditional inflation hedge, but its decline highlights how energy-driven inflation and high interest rates are currently reshaping investor behavior in global markets.
Gold slipped to its lowest level in more than two weeks on Thursday as a rally in oil prices heightened inflation worries, with the Federal Reserve due to deliver its policy decision next week.
Spot gold slid 2.2% to $4,051.55 per ounce by 11:44 a.m. ET.
US gold futures for December delivery fell 2% to $4,066.20 per ounce.
"Gold prices can fall further... because we are still seeing a lot of uncertainty around the energy market," said Soni Kumari, analyst at ANZ.
Brent crude rallied over $2 a barrel on Thursday after more Houthi attacks in Saudi Arabia stoked concerns over a broader escalation of conflict and further disruptions to crude supplies.
While gold is typically considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding asset.
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