Gold Tumbles 1.29% to $4,008.10 as Oil-Driven Inflation Fears Lift U.S. Rate Expectations

Gold prices slumped Friday, with front-month Comex December gold falling $52.30, or 1.29%, to $4,008.10 per troy ounce, as surging crude oil prices fueled inflation concerns and raised expectations of a tighter U.S. interest rate regime. Comex December silver dropped $1.017, or 1.85%, to $53.990 per troy ounce. Oil costs climbed for a second day on re-escalation risks in the U.S.-Iran conflict following November U.S. midterm elections. The New York Times reported the U.S. and Israel are preparing a short, intense military campaign against Iranian targets after the vote, while Iran's Islamic Revolutionary Guards Corps claimed attacks on vessels in the Strait of Hormuz, assertions Washington dismissed. Higher energy costs threaten to prolong inflation and pressure the Federal Reserve toward tightening, weighing on non-yielding gold. Investors priced an 89.5% chance of rates held steady at the Fed's October 27-28 meeting, with a 10.5% chance of a 25-basis-point hike, per CME Group's FedWatch Tool. The U.S. Dollar Index traded at 101.82, up 0.22%.