Gold prices fell by about 8% to around $4,100 an ounce on Monday, hitting their lowest level in four months, amid escalating tensions in the Middle East and rising inflation fears.
Over the past week, gold lost more than 10% of its value, as rising oil prices increased inflationary pressures, prompting markets to reduce expectations of interest rate cuts and even price in the possibility of a prolonged freeze or even a rate hike by major central banks.
Investors are increasingly betting on the Federal Reserve raising interest rates by the end of the year, given the continued inflationary pressures.
Meanwhile, major central banks such as the European Central Bank, the Bank of England, and the Bank of Japan kept interest rates unchanged, but indicated their readiness to tighten monetary policy if inflationary pressures persist.
Some economies are also facing increasing pressure to boost liquidity, including the potential sale of gold, to offset the effects of war, which is adding to the downward pressure on the metal's price.
📌 Summary
Gold is falling to near $4,100 under pressure from escalating tensions, inflation fears, and rising expectations of interest rate hikes, keeping the near-term outlook negative.