Gold falls below $4,250 per ounce after US Federal Reserve decision

Gold prices fell by more than 1% on Wednesday following the U.S. Federal Reserve’s decision to raise interest rates by 25 basis points, as the dollar strengthened and the appeal of the non-yielding precious metal declined.

Spot gold dropped to $4,240.10 per ounce after briefly surpassing $4,365 earlier in the session, prior to the Fed’s announcement, marking a sharp reversal in price direction following the rate hike decision.

The Federal Reserve decided to raise its target interest rate range by a quarter of a percentage point to between 3.75% and 4%, amid persistent inflationary pressures. Fed Chair Kevin Warsh emphasized that inflation remains elevated and that price stability will continue to be the central focus of monetary policy.

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The decline in gold came alongside a rise in the dollar following the decision. A stronger U.S. currency makes the precious metal more expensive for holders of other currencies, while higher interest rates increase the opportunity cost of holding gold.