Prices of the yellow metal plunged as the Fed unveiled a hawkish stance in the FOMC review on Wednesday. Markets, which were factoring a softer Fed post the easing in the consumer price inflation readings were in for a shock as the Fed warned that interest rates would peak at a higher level than anticipated earlier. In the summary of economic projections released by the Fed, the peak federal funds rate is pegged at 5.1 percent versus 4.6 percent projected in September and 3.8 percent projected in June 2022.
The Fed and Bank of England have both raised rates by 50 basis points. The European Central Bank is also expected to follow suit with a 50-basis-points hike, later in the day.
The Fed's hawkishness lifted the Dollar and dragged the dollar-denominated gold prices. The Dollar Index, which measures the strength of the Dollar against a basket of 6 currencies surged 0.53 percent to 104.32, versus 103.77 a day earlier.
Gold Futures for February Settlement have plunged 1.65 percent to $1,788.70. Prices oscillated between $1,783.90 and $1,819.70.
Spot Gold also shed 1.6 percent to trade at $1,778.24 per troy ounce. The day's range has been between $1,774.11 and $1,808.74.
