The demand for high-yielding assets such as Treasury Yields surged by more than 1.4% on Thursday after the Federal Reserve announced that it will likely end its pandemic-related stimulus support for the U.S. economy by the middle of next year and begin raising interest rates by the end of 2022. As a result, the non-yielding bullion saw a plunge in its price by about 1.6% in a single day.

The Fed policy meeting also revealed new projections, which showed that half of the officials were ready to increase interest rates next year in response to the high inflation. As we already know, gold is often considered a hedge against inflation, but a potential interest rate hike increases the opportunity cost of holding gold as it does not pay any interest.

The Fed Chair Jerome Powell has also said that the central bank could begin withdrawing its economic stimulus related to asset purchases of $120 billion after November’s policy meeting as long as the U.S. job growth remained reasonably strong through September. However, on Thursday, a rise in the number of U.S. jobless claims from last week weighed heavily on the U.S. dollar and limited the downward pressure on the yellow metal.

On the data front, at 17:30 GMT, the unemployment claims from last week surged to 351K against the projected 322K and weighed on the U.S. dollar, which caused a further loss in the yellow metal. At 18:45 GMT, the Flash Manufacturing PMI in September remained flat with an expected reading of 60.7. The Flash Services PMI dropped in September to 54.4 against the forecast 55.1. At 19:00 GMT, the C.B. Leading Index surged to 0.9% against the projected 0.7% and supported the U.S. dollar, which added to the losses of yellow metal prices.