Gold falls to 13-month low of $3,850 as Fed rate hike bets rise

Gold prices fell to within a couple of dollars of $3,850 an ounce on Thursday, marking their lowest level in more than 13 months. A stronger US dollar weighed heavily on the precious metal, according to European Business Magazine.

The price drop followed a hawkish speech from Federal Reserve Governor Christopher Waller on Tuesday. Hotter-than-expected US inflation data further strengthened expectations of tighter monetary policy.

Financial markets now price the probability of a Federal Reserve rate hike of at least 25 basis points in December at 100 percent. Some traders are even anticipating a potential 50 basis point increase.

Bond markets reflected the shift in rate expectations as the yield on the 10-year US Treasury bond rose back above 5 percent. Meanwhile, the dollar index approached 103, a level last seen in April of last year.

Currency markets also experienced sharp movements alongside the rally in the greenback. The dollar-yen exchange rate broke above 160 for the first time since early September, while the euro dropped to a fresh 18-month low.

Silver prices also declined, moving back below $50 an ounce, though remaining above the month's previous lows. Market analysts noted that silver's direction remains closely tied to the movement of the US dollar.

What do these terms mean?

Basis points: A standard unit of measurement for interest rates and financial percentages, where one basis point equals 0.01 percent.

Monetary policy: The actions taken by a central bank to manage money supply and interest rates to achieve stable economic growth.

Treasury bond: A debt security issued by the US government to raise capital, paying a fixed rate of interest over time.

Yield: The annual interest or return earned on an investment, expressed as a percentage of the asset's price.

Dollar index: An index measuring the value of the US dollar relative to a basket of major global foreign currencies.