Gold prices are maintaining a decline, trading around $4,290 an ounce, after a significant drop of over 1% in the previous session to a five-week low. This downturn is attributed to increasing disruptions in oil flows from the Middle East, which are reinforcing expectations that the Federal Reserve will raise interest rates very soon.
The prospect of higher energy prices is stoking inflation concerns, placing pressure on the Federal Reserve to implement its first rate increase in three years. Traders are now pricing in a 92% probability of a rate hike occurring when the central bank convenes in the coming days.
Higher borrowing costs typically have a negative impact on gold, as the non-yielding asset becomes less attractive compared to interest-bearing investments.
