Baku:Gold prices fell below $4,100 an ounce due to stronger-than-expected US inflation data, which increased expectations of further Federal Reserve interest rate hikes.

According to Anadolu Agency, the price of gold dropped to $4,094.57 an ounce, marking a 1.61% decrease as of 1310GMT, the lowest level seen since early August. Silver also experienced a significant decline, falling 3.9% to $59.80 an ounce.

US annual consumer inflation accelerated to 3.7% in September, surpassing market predictions of 3.6%, largely driven by higher energy prices. Additionally, consumer prices rose by 0.6% month-on-month, representing their largest increase in five months. Core inflation, which excludes food and energy costs, also exceeded expectations, reaching 2.6% on an annual basis and 0.3% monthly.

These inflation figures led investors to re-evaluate the Federal Reserve's interest rate outlook, negatively impacting the attractiveness of precious metals, which do not offer interest income and usually become less appealing when borrowing costs rise.

Market predictions indicated approximately a 50% chance that the Federal Reserve would maintain interest rates at the same level during its October meeting, a decrease from over 78% before the inflation report. Meanwhile, the likelihood of a rate hike in December increased to nearly 99%, compared to 88% previously.

Despite recent Federal Reserve communications suggesting little indication of consecutive rate increases in October, the stronger-than-expected core inflation figures have renewed consideration of this possibility.