Gold was trading lower on Thursday morning in the international markets after the US Federal Reserve hiked its benchmark short-term interest rate by 25 bps to 2 percent on Wednesday.
In its statement, the Federal Open Market Committee also spoke of an optimistic view on economic growth for the year, indicating two more likely hikes. With the previous rise in interest rate in March, this would mean four hikes for the year 2018. US producer prices saw the biggest annual gain in nearly 6 and a half years in May and this could cause inflation pressures in the coming months. Following the hike, the two-year American treasury yields touched their nearly 10-year highs.
In times of positive economic situations, investors move away from gold, causing the downfall in the precious metal's prices.
Gold prices in India cities were mainly flat, after the Indian rupee gained against the dollar on Thursday at 67.57. US spot gold was trading lower by 0.1 percent at $1,298.61 per ounce. It had touched one-week low at $1,292.15 on Wednesday.
Market investors are now waiting for the policy announcements from European Central Bank on Thursday and Japanese central bank on Friday. Additionally, US president Donald Trump will meet his advisers on Thursday to decide whether or not he should activate the billion dollar tariffs he threatened to impose on China.