Gold (TIKER: GC.COMEX.V2017) dropped to its lowest level in over three weeks on Thursday as the Federal Reserve signalled it was on track to raise US interest rates again in December, Nasdaq.com reports.
Spot gold was down 0.5% at $1,295.51 an ounce, having earlier touched its lowest since late August at $1,292.84.
US gold futures for December delivery were down $17.40 an ounce at $1,299.
The metal has pulled back more than $60 an ounce since hitting its highest in more than a year earlier this month at $1,357.54.
“The opportunity cost of holding gold seems to be going up now, and that’s bad news for gold. We went up to $1,350 so quickly, and now we have consolidation. With the wording from the Fed, that could go on for a while. We will head down to $1,250 in the next couple of weeks, and then we’ll think again (once) people have digested the news on interest rates,” LBBW’s head of commodity research Frank Schallenberger said.
The US dollar rose and bond yields jumped to their highest levels in six weeks after the Federal Reserve announced a plan to start shrinking its balance sheet in October and signalled one more rate hike later this year.
"The Federal Open Market Committee (FOMC) was surprisingly upbeat and held the line on rate hikes in 2017 and 2018 which has caught traders by surprise," said Jeffrey Halley, a senior market analyst at OANDA.