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Gold futures tumble to 8-month low on Fed rate outlook

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Shutterstock photo - - Gold futures tumbled to the lowest level since January on Thursday, after the Federal Reserve brought forward its outlook for rising interest rates.

On the Comex division of the New York Mercantile Exchange, gold for December delivery lost as much as $19.30 to hit a daily low of $1,216.60 a troy ounce, a level not seen since January 2.

Prices recovered to last trade at $1,223.70 during European morning hours, down $12.30, or 1%. A day earlier, gold prices shed 80 cents, or 0.06%, to settle at $1,235.90.

Futures were likely to find support at $1,204.30, the low from January 2 and resistance at $1,240.10, the high from September 17.

The Fed cut its monthly bond-buying program by another $10 billion following its two-day policy meeting on Wednesday, keeping the program on track to finish next month.

While the Fed reiterated that it expects rates to remain on hold for a "considerable time" after its quantitative easing program ends, it also projected a faster pace of rate hikes.

For the end of 2015, the median forecast was 1.375% compared to a June forecast of 1.125%.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Speaking at the central bank's post-policy meeting press conference, Fed Chair Janet Yellen emphasized that the timing of the first rate hike would be data-dependent.

The dollar rose to its highest level in six years against the yen, while the euro slid to fresh 14-month lows, as markets interpreted the Fed's statement as hawkish.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Investors were also looking ahead to Thursday's independence vote in Scotland, with polls currently show that the referendum is too close to call. A win for the "Yes" campaign could result in the break-up of the United Kingdom.

Also on the Comex, silver for December delivery shed 23.4 cents, or 1.25%, to trade at $18.50 a troy ounce, the lowest since June 28, 2013.

Elsewhere in metals trading, copper for December delivery lost 0.9 cents, or 0.28%, to trade at $3.135 a pound.

Data released earlier showed that new home prices in China rose at annualized rate of 0.5% in August, below expectations for a gain of 2.3% and slowing from July's 2.5% increase.

On a monthly basis, prices fell 0.6%, their fourth consecutive decline, fuelling concerns about the health of the real-estate market.

China is the world's largest copper consumer, accounting for nearly 40% of global demand. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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