Gold prices rose after the US Federal Reserve raised interest rates by 75 basis points for a third straight time, a widely expected move that put to rest predictions by some that the central bank making a more aggressive hike.
Spot gold increased 1.3% to $1,687.10 an ounce at 2:58 pm in New York after initially dipping as much as 0.7%. The Fed said it anticipates ongoing rate hikes are appropriate, while the median Fed forecast shows rates at 4.6% in 2023.
"Some were predicting they maybe do a full point, and the fact they kept it as expected, has gold catching a bid here and making a rally," said Robert Haberkorn, senior market strategist at RJ O'Brien & Associates. "The market was anticipating a 0.75 rate hike, and there were no significant surprises from what the market has been pricing in."
Gold is down 7.8% this year as the highest inflation in decades motivated central banks from Europe to the US to hike interest rates at the strongest pace in recent memory. Higher rates reduce the appeal of gold, which isn't an interest-bearing asset.