Gold prices rose on Wednesday, extending gains to 1 percent as the dollar fell after the US Federal Reserve raised interest rates as expected but left its outlook unchanged for coming years. The spot gold price rallied to $1,256.87 after the Fed raised its benchmark interest rates by 25 basis points, or a quarter of a percentage point.
Having raised its benchmark overnight lending rate three times this year, the Fed projected three more hikes in each of 2018 and 2019 before a long-run level of 2.8 percent is reached. That outlook is unchanged from the last round of forecasts in September. The dollar index against a basket of six major currencies dropped as low as 93.596.
A weaker dollar generally boosts the price of dollar-denominated gold. Spot gold was up 1 percent at $1,255.38 an ounce by 4:13PM EST (21:13 GMT). US gold futures for February delivery settled up $6.90, or 0.6 percent, at $1,248.60 per ounce. Traders said inflation fears also supported gold's price, even though inflation data released early in the session was mild.