Gold Prices Plummet in UK as Fed Raises Interest Rates by 25 Basis Points

The Federal Reserve's decision to raise interest rates by 25 basis points has sent shockwaves through global markets, causing gold prices in the UK to plummet. The London Bullion Market Association PM fix placed 24-carat spot gold at £3,192 per troy ounce on Tuesday, equivalent to £102.60 per gram, down £0.88 from Friday's close of £103.48 per gram.

The rate hike lifted the dollar relative to sterling, compressing the pound-denominated gold price despite a modest decline in the dollar spot price of gold to around $4,295 per troy ounce. Central bank demand remains strong, with emerging-market central banks continuing to drive institutional buying, providing structural support beneath the dollar spot price.

The move is not expected to signal the end of the hiking cycle, with markets set to study the updated dot-plot closely for any signs of a slowdown in future rate hikes. The question now is whether Tuesday's dollar strength proves durable, potentially paving the way for sterling-denominated gold to recover some lost ground before the end of the week.