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Gold prices retreated slightly on Monday, as rising oil prices exacerbated inflation concerns and bolstered expectations that the Federal Reserve (U.S. Central Bank) may raise interest rates at its monetary policy meeting this week.
By 0119 GMT, gold in spot transactions decreased by 0.5 percent to $4327.80 per troy ounce, after recording a third consecutive weekly decline on Friday. U.S. futures for gold delivery in December fell by about one percent to $4368.60.
According to the FedWatch tool by CME, traders expect an 86 percent chance of a U.S. interest rate hike during the central bank's monetary policy meeting on September 15-16, compared to about 67 percent before the release of inflation data last week.
Data released on Friday showed that the pace of U.S. consumer price increases accelerated in August, while one of the main measures of core inflation recorded its largest increase in four months, reinforcing expectations that the Federal Reserve will raise interest rates this week.
Oil prices jumped more than two percent on Monday after new Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf exacerbated supply concerns following the closure of a major Saudi oil pipeline.
Diplomatic efforts in the Middle East appear to be stalling after a meeting between Iran and other Gulf countries was postponed.
Goldman Sachs said on Friday that it still sees upside risks to its forecast that gold prices will reach $4900 per troy ounce by the end of 2026, although it expects price volatility to remain high.
For other precious metals, silver in spot transactions fell 1.1 percent to $63.75 per troy ounce on Monday, platinum decreased by 0.8 percent to $1782.50, and palladium dropped by 0.7 percent to $1290.36.
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