Gold prices fell by more than 1% on Thursday, extending their losses for a third straight session as stronger-than-expected US inflation data increased expectations of an interest rate hike.
Spot gold dropped 1.8% to $4,083.94 an ounce, its lowest level since October 7. US gold futures for December delivery also fell 1.7% to $4,107.90 an ounce.
The stronger US dollar and rising Treasury yields added further pressure on gold. The dollar index climbed 0.5%, while the yield on 10-year US Treasury bonds also increased, making gold less attractive to investors.
US data showed that the Consumer Price Index rose 0.6% last month, compared with a 0.4% increase in August. The higher reading strengthened expectations that the Federal Reserve may need to tighten monetary policy.
Following the inflation report, the probability of a US interest rate hike in October rose to 42%, up from 22% before the data was released.
Other precious metals also recorded sharp losses. Silver fell 6.6% to $55.53 an ounce, platinum dropped 3.5% to $1,605.37, and palladium declined 2.8% to $1,094.50 an ounce.
