Gold slips as investors gauge rate hike prospects

Gold slipped on Thursday, as the non-yielding metal's appeal was dented after the Federal Reserve's biggest rate increase since 1994 to tame inflation, with other central banks likely to follow suit, reports Reuters.

Spot gold fell 0.6 per cent to $1,822.29 per ounce by 1129 GMT. US gold futures rose 0.1 per cent to $1,821.10.

Gold erased small gains earlier in the session driven by a slight dip in the dollar index, which was still near recent two-decade highs.

"The current higher interest rate environment has put a damper on gold demand despite the real inflation threat," said Vincent Tie, sales manager at dealer Silver Bullion.

Bullion was hemmed into a range after Wednesday's bounce, which was spurred by a retreat in the dollar and yields after the Federal Reserve's rate hike. While gold is considered an inflation hedge, higher rates and bond yields increase the opportunity cost of holding non-yielding bullion.

Meanwhile, global stocks fell as sentiment was hit by the Swiss National Bank raising its policy rate for the first time in 15 years with a surprise 50 basis point hike. Gold's safe-haven demand could fade further if the Fed successfully fights inflation without pushing the US into a recession, said Carsten Menke, head of Next Generation Research at Julius Baer.