The prices of gold futures fell about 1% on Thursday, giving back some of its gains overnight in volatile trading as the US dollar rose after the Federal Reserve raised interest rates for the first time in almost a decade.
The gold for February delivery on the Comex collapses $ 11.00, or 1.02%, to trade at $ 1065.80 a troy ounce.
Spot gold dropped 0.2 percent to $ 1070.70 an ounce. The metal had met before the Fed move on Wednesday and managed to hold onto most of the gains to publish the statement of the central bank, ending the day up 1.2 percent.
The Federal Reserve raised interest rates by 25 basis points to a range of 0.25% and 0.5%, in a widely expected move after the conclusion of its policy meeting on Wednesday.
Commenting on the decision, the Fed President Janet Yellen said that more rate hikes would be gradual and dependent on the data.
The US dollar index, which measures the strength of the greenback versus a trade-weighted basket of six major currencies, rose 0.35% to 98.75. The stronger dollar normally weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The Fed action gold leaves placed for some profits, largely on short covering, but only modestly, he said.
Investors increased their short positions in gold to record highs this month, although already edged back from that peak.
Rate forecasts point or points of Fed members were somewhat higher than many expected 100 basis points of hikes in pencil in the coming year and a terminal rate of 3.5 percent.
The discrepancy between the provisions of the Fed and the market could hurt gold prices as investors begin to align their views with the central bank.
At the Multi Commodity Exchange, gold prices for delivery in February next year fell by Rs 190, or 0.75 per cent, to Rs 25,278 per 10 grams as participants cut their bets amid a weak global trend.
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