Spot gold was down 0.1 per cent at $1,299.31 an ounce at 0326 GMT, after earlier touching its lowest since late August at $1295.65.
US gold futures for December delivery fell 1 per cent to $1,302.60 an ounce.
The US dollar rose and bond yields jumped to their highest levels in six weeks after the Federal Reserve announced a plan to start shrinking its balance sheet in October and signalled one more rate hike later this year.
The dollar on Thursday extended gains and inched up against a basket of currencies . It rose 0.2 per cent versus the yen.
“The Federal Open Market Committee (FOMC) was surprisingly upbeat and (held) the line on rate hikes in 2017 and 2018 which has caught traders by surprise,” said Jeffrey Halley, a senior market analyst at OANDA.
The Fed’s announcement on another interest rate hike this year took markets by surprise as a series of poor inflation readings had dampened expectations for such a step.
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