Gold falls as Fed hike odds rise on Opec+ oil output cut

The bullion has dropped as investors weigh up its lure as a safe-haven asset against the potential for higher-for-longer interest rates, analyst says

— Gold prices slid on Monday after a surprise announcement from Opec+ about a cut to oil output sparked inflation concerns and raised bets of an interest rate hike at the US Federal Reserve’s upcoming May meeting.

The opportunity cost of holding non-yielding bullion rises when interest rates are increased to lower inflation. Oil prices surged after Saudi Arabia and other Opec+ oil producers announced a round of output cuts, a potentially ominous sign for global inflation just days after a slowdown in US price data had boosted market optimism.

“Gold is now vulnerable to a move down to $1,900, given the potential for a higher terminal Fed rate that markets are now pricing in,” Simpson added.

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