Federal Reserve Raises Interest Rates as Inflation Concerns Persist

The Federal Reserve raised its target interest rate range by 25 basis points to 3.75-4.0% on Wednesday, in a decision made under new Chair Kevin Warsh and passed unanimously by the rate-setting committee for the first time in more than three years.

Sticky inflation, with rising energy prices a significant contributor, was central to the central bank's reasoning.

UBS Global Wealth Management said the Fed's updated projections show most policymakers expect at least one further hike this year, which could keep US real yields and the dollar elevated and raise the opportunity cost of holding gold, adding to near-term volatility for the metal.

The bank noted that solid inflows into gold exchange traded funds in August amid concerns over Fed independence and rising debt levels may reverse following what it called a hawkish hike.