Investing.com - Gold prices dipped below the psychologically important $1,200 level on Thursday, finding little support after the Federal Reserve raised interest rates and indicated that it remains on track to continue monetary tightening into next year.
The Fed raised interest rates by a quarter point to 2.25% on Wednesday, its third rate hike this year and its eighth since 2015.
In its statement, the Fed said it still foresees another rate hike in December followed by three more in 2019, and one additional increase in 2020.
The central bank dropped the word "accommodative" to describe its monetary policy stance in its statement, saying the change does not signal any change in the bank's path toward normalizing monetary policy.
While Fed Chairman Jerome Powell said he does not see inflation surprising to the upside, policymakers revised up their outlook for U.S. economic growth this year and next.
December gold futures were trading at $1,199.60 by 07:02 AM ET (11:02 AM GMT) on the Comex division of the New York Mercantile Exchange.
Prices slid to a two-week low of $1,194.7 in the immediate aftermath of Wednesday’s rate hike, before recovering some poise to end the day little changed.
Gold remained under pressure as demand for the dollar was underpinned, with the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, up 0.22% to 94.09.
The prospect of further interest rate increases and higher U.S. bond yields dampen appeal for the bullion, which offers no yield. They also tend to boost the dollar, making dollar-denominated gold more expensive for holders of other currencies.
Prices of the yellow metal are down around 11% from their April highs.
Elsewhere in metals trading, December silver was down 0.37% to $14.44 a troy ounce, while January platinum was trading at $82.6, up 0.42% for the day.
Among base metals, December copper shed 0.95% to trade at $2.801.