Gold prices fell more than 3% today, breaking below the $4,200 level to touch a low not seen in more than seven weeks, pressured by a surge in oil prices that stoked investor concerns about inflation and reinforced expectations that the U.S. Federal Reserve will raise interest rates in October. As of 9:10 p.m. Thailand time, spot gold was down $131.14, or 3.07%, at $4,146.64 an ounce, its lowest level since August 5. December-delivery gold futures on the COMEX market fell $140.40, or 3.20%, to $4,180.80 an ounce. Most recently, the CME Group's FedWatch Tool indicated that investors now assign a 68.1% probability to the Fed raising rates by 0.25% to a range of 4.00-4.25% at its October meeting, up from 57.6% a week earlier, and a 55.1% probability to another 0.25% increase to 4.25-4.50% in December, up from 44.1%. Meanwhile, West Texas crude oil prices surged past $95 a barrel and Brent crude topped $108 a barrel after President Donald Trump rejected Iran's peace proposal, while the yield on 10-year U.S. Treasury bonds jumped to 5.200% and the 30-year yield rose to 5.500%. Giovanni Staunovo, an analyst at UBS, said the surge in oil prices and the prospect of Fed rate hikes are the main factors behind gold's decline, and that this environment could keep U.S. real bond yields and the dollar elevated, which would raise the opportunity cost of holding gold.
CME Group Inc
UBS Group AG
