Gold Price Dips As US Fed Holds Rates For Third Time In Row; Bitcoin Up 2%

Gold prices fell after the US Federal Reserve announced a status quo in the benchmark lending rates. The bullion, which was already under pressure during the day, traded nearly 1.4% lower following the disclosure of Fed decision.

Spot gold was trading at $3,388 an ounce in the global market, down 1.32% at 2:30 pm (EST). On the New York-based Commodities Exchange Inc., the metal's futures were trading 1.34% lower at $3,376.9 per ounce.

The Fed kept the key interest rates unchanged in the zone of 4.25% to 4.5% for the third time in a row.

Gold prices usually see an uptick in case of the lending rates being eased, as the metal—considered as a top hedge against inflation—sees a spurt in demand amid lower interest rates.

Meanwhile, Bitcoin gained as the world's largest traded cryptocurrency was trading 2.24% higher at 96,811.57 at 2:30 pm (EST). The uptick was likely driven by the Fed's uncertainty over the economic outlook.

Unlike traditional investment assets like bond and savings, cryptocurrency finds greater appeal amid periods of uncertainty.

The Federal Open Market Committee, in its statement, said "uncertainty about the economic outlook has increased further". It pointed towards the mixed signals that have emerged from the economy in recent period.

The US economy has exhibited both strength and weakness. Even as the gross domestic product declined by 0.3% on a yearly basis in the January-March quarter, the slump was primarily driven by a surge in imports before the tariffs kicked-in in April.

Also, the employment data showed the resilience of the US economy, with non-farm payrolls data showing an addition of 177,000 jobs in April, higher than the estimates. A strong job market disincentivises the Fed to reduce the lending rates.

"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace," the FOMC said. The unemployment rate has "stabilised at a low level" in recent months, and labour market conditions "remain solid", it said, while adding that inflation remains somewhat elevated.