Investing.com - Gold prices tumbled to four-week lows on Thursday, as the U.S. dollar bounced higher after the Federal Reserve indicated the possibility of an additional rise in interest rates this year.
Comex gold futures were down $17.61 or about 1.34% at $1,298.70 a troy ounce by 04:00 a.m. ET (08:00 GMT), the lowest since August 28.
As expected, the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday.
However, the central bank indicated that one more interest rate hike is likely this year, even though it reduced its outlook for inflation this year from 1.7% to 1.5%, and from 2% to 1.9% in 2018.
The Fed also said it will begin to unwind its $4.5 trillion balance sheet in October. Most assets consist of the Treasurys and mortgage-backed securities the bank acquired under its quantitative easing program.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, wassteadyat 92.25,the highest since September 14.
Gold is sensitive to moves in the dollar. A stronger dollar makes gold more expensive for holders of foreign currency.
However, the precious metal's losses were expected to be capped by potentially higher tensions between the U.S. and North Korea following harsh statements from U.S. President Donald Trump.
In his first speech before the United Nations General Assembly on Tuesday, Trump said "the United States has great strength and patience, but if it is forced to defend itself and its allies, we will have no choice but to totally destroy North Korea."
Elsewhere on the Comex, silver futures lost 1.78% to $17.03 a troy ounce.