Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.5% to close at a three-week low above $1,199 as the dollar rose ahead of the Fed's decision on interest rates. The metal then bounced back above $1,200 in electronic trade after the Fed raised rates and signaled a possible slowing in the pace of future hikes.

The Federal Reserve raised a benchmark interest rate by a quarter-point for the third time this year, pushing it up to between 2% and 2.5%. While the increase was widely expected and largely priced into the market, it nonetheless gave the dollar a boost, which pressured gold by making it more expensive in other currencies.

But the Fed's accompanying statement carried a significant change in its description of current monetary policy. The committee removed language saying its stance "remains accommodative," a revision indicating that the Fed sees interest rates as being close to neutral. A neutral rate is a Fed goal because it neither stimulates nor constrains the economy, and suggests that the need for further tightening has diminished.

With traders reading the policy revision as a dovish signal that the pace of rate hikes is likely to slow next year, gold pushed back above $1,200 after hours as the dollar turned negative. But the expectation of a fourth hike in December kept the lid on gold's rebound. All but four FOMC members now support a December hike, up from all but eight in June, according to the Fed dot plot.

The other precious metals were mixed, with silver sliding 0.6% while platinum and palladium rose 0.4% and 0.9%, respectively.

At the Comex close: December gold dropped $6 to $1,199.10; December silver slid nine cents to $14.40; January platinum added $6.20, to $829.10; December palladium rose $9.30 to $1,063.10 an ounce.