Investing.com – Gold prices fell sharply on Thursday as traders continued to unwind their bullish bets on the precious metal in the wake of the Federal Reserve’s policy statement which sparked expectations of a year-end rate hike.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell by $19.80, or 1.50%, to $1,296.60 a troy ounce.
Gold prices slid to a more than four-week low as a somewhat hawkish Federal Reserve said Wednesday it would start to unwind its massive portfolio of bonds in October and signalled that a year-end rate hike remained appropriate.
The "dot plot," part of the FOMC's Summary of Economic Projections, indicated that the central bank saw rates rising to between 1.25% and 1.5% by the end of the 2017. With rates steady at 1-1.25%, that points to one further rate hike this year.
According to investing.com’s fed rate monitor more than 70% of traders expect the Federal Reserve to hike rates in December.
Gold is sensitive to moves higher in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Meanwhile, rising geopolitical tensions did little to stem losses in gold after U.S. President Donald Trump ordered a fresh round of sanctions to curb North Korea’s nuclear missile program.
"Today I'm announcing a new executive order, just signed, that significantly expands our authority to target individual companies, financial institutions, that finance and facilitate trade with North Korea," Trump told reporters ahead of a luncheon meeting with the leaders of Japan and South Korea.
In other precious metal trade, silver futures lost 1.66% to $17.05 a troy ounce while platinum futures lost 0.60% to $939.70.
Copper traded at $2.94, down 1.11% while natural gas fell by 4.56% to $2.95.