In the wake of a sharp drop Thursday, gold may struggle to see heights over $1,300 an ounce again as the tailwinds from central banks on an easing bent stalled when faced with the Federal Reserve's resolve.
"Gold is set for another bearish year," Howie Lee, an analyst at Phillip Futures, said in a note Thursday before the metal's decline in U.S. trading hours. He cited a "strong signal" of interest rate hikes ahead based on changes in the U.S. Federal Open Market Committee statement Wednesday.
"A hawkish U.S. Federal Reserve adds negative pressure on gold, as higher interest rates and a stronger dollar dims the appeal of gold as an alternative asset," Lee said.
In a unanimous vote, the FOMC said that "it can be patient in beginning to normalize the stance of monetary policy," but dropped "considerable time" from its assessment of how long rates would remain in its 0-0.25 percent target range.