Gold erases gains after Fed hikes interest rates

  • Gold erased gains after Fed hikes interest rates
  • ECB, BOJ policy meetings due later this week
  • Dollar at 3-week high versus yen
Source: World Gold Council

Gold prices erased their gains on Wednesday after the U.S. Federal Reserve announced it raised its benchmark short-term interest rate by a quarter percentage point.

The Fed also indicated that two more rate increases are likely.

Spot gold was down 0.08 percent at $1,294.70 an ounce at 2:17 p.m. ET, down nearly 0.3 percent from shortly before the Fed's announcement.

U.S. gold futures for August delivery were 0.11 percent lower at $1,298 per ounce.

The dollar, which measures the greenback against a basket of six major currencies, was up 0.1 percent at 110.55 yen, after touching 110.68, its highest since May 23.

Gold is highly sensitive to U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.

The European Central Bank (ECB) meets on Thursday, when it could signal intentions to start unwinding its massive bond-purchasing program.

The Bank of Japan's two-day monetary policy meeting also begins Thursday.

The yellow metal is expected to drop sharply towards a range of $1,263-$1,278 per ounce as its consolidation within a wedge is ending, Reuters technical analyst Wang Tao said.

In other precious metals, silver flattened out at $16.854 an ounce. It hit a seven-week high of $16.95 in the previous session.

Palladium was down 0.86 percent at $1,009.

Platinum was 0.49 percent higher at $898.40 per ounce, after hitting a one-week low of $889.40 earlier in the session.