FX.co ★ Gold Drops As Inflation Combat Gets Fiercer

Gold prices touched a one-month low of $1720 per troy ounce on Wednesday amidst fresh indications of persistent inflation and fears of a forceful combat by central banks. Data released earlier in the day showed inflation in the Euro Area rising to a record high of 9.1 percent, triggering fears of a massive rate hike by the European Central Bank at its review due next week. Gold prices have been decreasing ever since the Fed Chair reiterated at the Jackson Hole symposium last week, a commitment to fighting inflation until the job of bringing it down to the Fed's comfort level of 2 percent is achieved.

Adding pressure to the dollar denominated prices of the yellow metal was a resurgent Dollar. The Dollar, strengthened against major currencies, lifting the Dollar Index to as high as 109.20, versus the recent peak of 109.48 scaled earlier in the week.

Gold Futures for December settlement dropped 14 points to trade at $1,722.50, down 0.79 percent on an overnight basis. Prices oscillated between $1,720.70 and $1,737.95.