Gold price today falls as oil prices rise and Fed rate hike bets grow. Investors await US inflation data for clues on interest rates and gold's next move. 

Updated on: Sep 8, 2026, 18:46:14 IST

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Gold prices fell on Tuesday as rising oil prices increased inflation worries. Investors are now waiting for key US inflation data this week to understand what the Federal Reserve may do with interest rates. Spot gold fell 0.3% to $4,390.50 per ounce by 0816 GMT. The metal had earlier climbed as high as $4,442.70 per ounce, showing that trading remained volatile.

US gold futures for December delivery also dropped 0.9% to $4,435.00 per ounce. The main pressure on gold is coming from higher oil prices and growing bets that the Fed could raise interest rates. Higher oil prices can increase inflation, which could make the Fed more likely to keep rates higher or raise them further, according to a Reuters report.

Gold price falls as oil rises

“Gold trades cautiously today, caught between Fed rate hike bets and dollar softness,” said Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com. He said higher oil prices are increasing inflation risks and expectations for Fed rate hikes, putting pressure on gold.

Oil prices hit multi-week highs

Oil prices rose to multi-week highs on Tuesday. The rise came after Yemen's Tehran-backed Houthis attacked energy facilities and cities in US ally Saudi Arabia. The attacks added to concerns about a prolonged Middle East conflict and possible disruption to oil supplies. This pushed oil prices higher and increased worries that energy costs could keep inflation elevated.

Higher oil prices are a problem for gold because they can increase inflation expectations. If investors expect inflation to remain high, they may also expect the Fed to maintain tighter monetary policy.

US jobs data hits gold

Gold had already suffered a sharp fall on Friday after strong US jobs data. Spot gold dropped as much as 2.4% after data showed that US job growth accelerated sharply in August.

The US unemployment rate remained at 4.1% in August. The stronger labour market suggested that the US economy may still be strong enough to handle higher interest rates, according to a Reuters report.

Fed rate hike bets rise

The strong jobs report changed expectations for the Fed's next move. Traders are now pricing in around a 60% chance of an interest rate hike at the central bank's policy meeting, according to the CME FedWatch Tool.

That probability was around 50% before the latest jobs data. This means traders have become more worried that the Fed could raise rates after seeing stronger-than-expected labour market data.

Higher rates put gold under pressure

Higher interest rates usually make gold less attractive. Gold does not pay interest or a regular yield, so investors may prefer interest-bearing assets when rates rise.

This is why stronger rate-hike bets are weighing on gold despite its role as an inflation hedge. Gold is often bought as protection against inflation, but higher rates can reduce that appeal because holding gold has a higher opportunity cost.

Dollar gives gold some support

The weaker US dollar is giving gold some support. The US dollar index softened on Tuesday, making gold cheaper for investors who use other currencies.

However, the weaker dollar has not been enough to push gold higher. Oil prices and changing expectations for Fed policy are currently creating stronger pressure on the precious metal.

US inflation data in focus

Investors are now waiting for two major US inflation reports. The Producer Price Index (PPI) is due on Thursday, followed by the Consumer Price Index (CPI) on Friday, according to a Reuters report.

These inflation figures could give traders a clearer idea about the Fed's next move. A hotter-than-expected inflation reading could strengthen expectations for higher interest rates, while softer inflation could reduce those bets.

Gold could remain volatile until the inflation data is released. Investors are closely watching the numbers because the market's expectations for Fed policy are changing quickly. Tzabouras said gold may struggle to find a clear direction if the inflation data does not give a strong signal, according to Reuters. He said market expectations are changing quickly and the Fed itself lacks conviction over the policy outlook.

The key question for gold now is whether inflation remains high enough to keep the Fed focused on higher rates. Rising oil prices could make that situation more difficult for the central bank. Other precious metals also moved lower on Tuesday. Silver fell 0.5% to $65.76 per ounce, while platinum dropped 0.2% to $1,821.36. Palladium also declined. It fell 0.4% to $1,383.08 per ounce, according to Reuters.

For gold investors, the next big market trigger is US inflation data. Oil prices, Fed rate-hike expectations, the dollar and the PPI and CPI reports are likely to decide whether gold can recover from its recent decline or face more pressure.

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