Gold drops to £3,185 an ounce as oil jump revives Fed rate hike fears

Gold fell sharply as trading reopened on Monday, with The Royal Mint quoting about £3,185 a troy ounce early this morning, or roughly £102 a gram before dealer costs. That compares with the £3,247 at which the Royal Mint held the price over the weekend, a fall of close to 2 per cent. In dollar terms, The Rio Times reported spot gold down 2 per cent at about $4,198 in early Asian trade, with silver sliding 2.6 per cent to around $62.64.

The trigger was oil. According to The Rio Times, crude prices climbed after President Trump rejected an Iranian proposal linked to reopening the Strait of Hormuz. Dearer oil feeds inflation worries, and that has revived bets that the Federal Reserve will raise interest rates again. Because gold pays no interest, higher rates tend to make cash and bonds look more rewarding by comparison.

The next tests come quickly: US PCE inflation figures, the Fed's preferred price measure, are due on Wednesday 30 September, followed by the September jobs report on Friday.

For UK buyers, a lower spot price reduces the metal value of a coin or bar, but dealer premiums and delivery charges still vary widely. Investment gold is VAT free, so comparing the all-in price, spot plus premium plus fees, is the best way to find value. This is market information, not financial advice.