Gold dips in choppy trade after Fed rate hike
By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold slipped on Thursday, giving back some of its overnight gains, in choppy trading after the Federal Reserve raised U.S. interest rates for the first time in nearly a decade.
The U.S. central bank's policy-setting committee raised the range of its benchmark interest rate by a quarter of a percentage point, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.
Gold has slumped nearly 10 percent this year, largely on uncertainty around the timing of the U.S. rate hike and on fears that higher rates would hit demand for the non-interest-paying precious metal.
Though the Fed decision removes an overhang for gold prices, the focus now shifts to the central bank's pace of future rate increases.
Spot gold XAU= dipped 0.2 percent to $1,070.70 an ounce by 0037 GMT (7.37 p.m. EDT). The metal had rallied before the Fed decision on Wednesday and managed to hold on to most gains post the central bank statement, ending the day up 1.2 percent.
U.S. gold GCcv1 fell 0.6 percent to $1,070.50, following a 1.4 gain in the previous session.
"Gold has been extraordinarily sensitive to perceived changes in monetary policy for many months," said HSBC analyst James Steel. "The rate rise may finally clear the deck and remove rate-related uncertainty from the bullion market."
The Fed action leaves gold positioned for some gains, largely from short covering, but only modestly, he said. Continued...