Gold prices took a tumble on Thursday, following Wednesday's Federal Reserve policy meeting. The central bank's decision to hold its benchmark interest rate steady and indications that these rates will remain high throughout next year led to a sharp rise in the U.S. dollar value.
The Federal Reserve also hinted at the possibility of an additional rate hike later this year, a move that further propelled the U.S. dollar's surge. This development reverberated across global markets, exerting downward pressure on gold prices.
Thursday saw the ICE (NYSE: ICE ) U.S. Dollar Index DXY ascend by 0.5% to reach 105.67, its highest level in over six months. This uptick in the dollar rippled through U.S. equity futures and played a key role in driving down gold prices.
Prior to the Federal Reserve's decision, gold had been rallying toward $1,950, in line with highs from earlier in the month. However, despite initial optimism, all of the day's pre-release gains were wiped out, leading to gold closing the trading day in negative territory.
The trading trajectory for gold continues to point downwards, and there are concerns it may revisit last week's lows around $1,900. The extent to which this will occur largely hinges on how traders interpret and react to the Federal Reserve's interest rate projections.
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