Gold prices suffered their largest decline in more than two months as investors reacted to a hawkish outlook from the Federal Reserve.
Gold for December delivery closed down 1.6% at $1,294.80 a troy ounce on the Comex division of the New York Mercantile Exchange, the largest drop since July 3.
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The Fed left rates unchanged Wednesday and hinted it could raise rates again in 2017, even though persistently low inflation has given some officials second thoughts about a move by then. Officials also said they would begin shrinking the U.S. central bank's portfolio of bonds in October.
Expectations of a more hawkish Fed tend to weigh on gold, which struggles to compete with yield-bearing investments when rates rise.
The Fed's statement " temporarily takes the shine off gold," analysts at Standard Bank said in a note to clients. They believe gold prices can drift lower in the short term as investors continue adjusting their positions to account for a more hawkish-than-expected Fed.
Gold prices are up around 11% this year.
Meanwhile, prices for copper and other base metals took a hit after Standard & Poor's became the last of three major ratings firms to downgrade China, the world's largest consumer of raw materials.
In a statement Thursday, S&P said the downgrade to A+ from AA- reflected its assessment that "a prolonged period of strong credit growth has increased China's economic and financial risks." Moody's Investors Service lowered its China rating in May, while Fitch Ratings did so in 2013.
The downgrade pushed some investors to lock in gains on industrial metals, after a sharp rally during the summer sent prices to multiyear highs.
Copper for December delivery closed down 1.2% at $2.9345 a pound. Nickel for delivery in three months was down 3.3% at $11,005 a metric ton on the London Metal Exchange.
Write to Ira Iosebashvili at email@example.com
(END) Dow Jones Newswires
September 21, 2017 14:43 ET (18:43 GMT)