Gold prices slide on rate hikes, inflation worries

On Monday, gold prices fell to a new 2 -- 1 2 year low weighed down by a strong dollar and the possibility of further interest rate hikes by the US Federal ReserveFederal Reserve to bring down inflation.

Spot gold was down 0.3% at $1,638. 59 per ounce was at 0053 GMT, after hitting its lowest level since April 2020 earlier in the session.

The dollar index has gone up since 2002, buoyed by a hawkish Fed, making the dollar-priced bullion more expensive for buyers holding other currencies.

Higher interest rates dulled the appeal of the bullion, since the metal yields no interest. Since scaling above the $2,000 per-ounce mark in March, gold prices have fallen more than 20%.

Atlanta Fed President Raphael Bostic said on Sunday that he still believes the US central bank can tame inflation without substantial job losses, given the economy's momentum.

A downturn in business activity in the euro zone has deepened in September, according to a survey showing the economy is likely to enter a recession due to consumers' reinflection in spending amid a cost of living crisis.

There was a surge in gold premiums in top consumer China last week, helped by strong demand for bullion, while prices in India traded at a discount for the first time in four weeks due to an increase in domestic rates.

The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.31% to 947.23 tonnes on Friday.

Spot silver fell 0.8% to $18.68 per ounce, platinum rose 0.7% to $860.13, and palladium rose 0.4% to $2,076.