Gold prices ticked lower on Thursday as the market took a breather after rallying 2.5 percent in the previous session following the Federal Reserve’s decision to cut the number of planned interest rate hikes, adding to pressure on the dollar.
Spot gold slid 0.2 percent to $1,259.61 an ounce by 0035 GMT after notching its biggest one-day rally in five weeks on Wednesday to a high of $1,264 an ounce. U.S. gold jumped 2.5 percent to $1,260.7 an ounce after settling down 0.1 percent in the last session prior to the Fed statement.
Asian shares gained early and the dollar was on the defensive after suffering substantial losses following the U.S. Federal Reserve’s move to reduce the number of interest rate hikes planned for this year.
The U.S. central bank held interest rates steady after its two-day meeting, as expected. However, fresh projections from policymakers showed they expected two quarter-point rate hikes by year’s end.
Volatility in equities and oil prices, a raft of mixed economic data, and concerns over global growth had curbed expectations for further hikes, allowing gold to rise almost 19 percent this year.
Gold is highly sensitive to the prospect of rising rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.