Gold Prices Plunge! Fed Raises Interest Rates

Gold prices remained on a downward trend during Thursday's trading (Sept. 17) after the Federal Reserve raised interest rates for the first time in three years. The US central bank also signaled that further rate hikes remain possible before the end of the year.

Gold traded around US$4,270 per troy ounce after falling approximately 2% over the previous three sessions. The decline occurred as market participants digested the Federal Open Market Committee's unanimous decision to raise the benchmark interest rate by 25 basis points.

The median interest rate projection for the end of 2026 was also raised to 4.1% from the previous forecast of 3.8%. This shift indicates Fed officials' support for tighter policy and reinforces expectations of further rate hikes.

The market viewed the Fed's latest guidance as hawkish. The US dollar strengthened following the decision, adding pressure on gold. Higher interest rates typically diminish the appeal of precious metals, as gold does not generate interest income.

Fed Chair Kevin Warsh reiterated that inflation remains a threat to the US economy. He highlighted that many categories of goods and services are still experiencing annual price increases exceeding 3%, while recent data showed US core inflation in August rose more than expected.

In the spot market, gold edged up 0.2% to US$4,273.82 per troy ounce at 07:52 Singapore time. Silver rose 0.5% to US$63.28, while platinum and palladium saw slight gains. The Bloomberg Dollar Index remained relatively stable after rising 0.5% in the previous session.