Banking News – Gold prices have started to decline as expectations strengthen that the US Federal Reserve (Fed) will raise interest rates further. According to Reuters, escalating military tensions between the United States and Iran in the Middle East have pushed global oil prices sharply higher, increasing inflationary pressures and reinforcing the likelihood of tighter monetary policy.

Senior Federal Reserve officials have publicly indicated support for additional rate hikes. Dallas Fed President Lorie Logan has openly advocated for higher interest rates, while Vice Chair Philip Jefferson stated that the Fed remains prepared to tighten policy further if inflation does not ease. Markets are now pricing in a 73% probability of a Fed rate hike in December.

As a result of these expectations, gold prices fell on Friday, extending weekly losses to 3.4%, marking the largest weekly decline since June. In the international market, spot gold slipped to around USD 3,980 per ounce, its lowest level since the beginning of July.

Market analysts note that gold and interest rates typically have an inverse relationship. Since gold does not generate interest or regular income, investors often shift their funds to interest-bearing assets such as bonds and bank deposits when interest rates rise.

KCM Trade Chief Market Analyst Tim Waterer told Reuters that despite relatively stable US inflation data, the 12% surge in oil prices following tensions in the Strait of Hormuz has significantly increased expectations of further monetary tightening. Rising energy prices are expected to fuel inflation, making additional interest rate hikes more likely.