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Spot gold extends losses after Fed announcement

Spot gold extended losses on Wednesday after the Fed announcement.

The U.S. Federal Reserve voted Wednesday not to raise its key interest rate, as central bank officials expressed concern with the pace of economic growth. The move was largely expected in financial markets.

Spot gold lost 0.86 percent to $1,246, while U.S. gold futures for June delivery dipped $8.50 to settle at $1,248.50.

Immediately prior to the Fed announcement at 1:55 pm ET, spot gold was down 0.57 percent at $1,249.62 per ounce. U.S. gold futures fell 0.54 percent to $1,250.20 an ounce.

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"We have the typical drivers for gold: the U.S. interest rate ... the U.S. dollar and also a decline of political uncertainty in Europe," Quantitative Commodity Research analyst Peter Fertig said.

Traders are pricing in a 70 percent chance of a June rate increase, according to the CME Group's FedWatch Tool.

European stocks hovered near 20-month highs after strong gains this week on forecast-beating company earnings and signs of global economic strength.

In French elections, the top two presidential rivals go head-to-head on Wednesday in a televised debate in the last encounter before Sunday's run-off in which opinion polls predict a win by centrist Emmanuel Macron.

Fears that far-right candidate Marine Le Pen could sweep to a surprise victory had buoyed gold in recent sessions due to its safe-haven appeal.

"There is a clear lead by Macron ... so there is less need to hold gold," Fertig said.

Silver decreased by 1.79 percent at $16.50 per ounce. Platinum dropped 2.58 percent to $898.74.

Palladium lost 1.84 percent to $800 per ounce.