Gold prices down after Fed rate hike

Gold prices slipped on Thursday after the Federal Reserve raised interest rates by 0.25 percent, its first increase in nine years.

Gold has drooped nearly 10 percent this year, largely on uncertainty around the timing of the US rate hike.

The interest rate hike was announced on Wednesday after a two-day policy meeting between officials with stocks rallying in early trading in Europe and the US.

The rate, which stands at 0.5 percent after the increase, was kept the same through out the global credit crunch so that financial institutions could borrow cheaply and in turn allow them to lend at lower rates.

The US central bank cited as the reasons for its action increased household spending and investment by business, along with a continued low rate of inflation. The bank also raised its projection for its economic growth next year slightly, from 2.3 percent to 2.4 percent. That suggests the bank does not think the rate increase will damage growth. US share markets jumped in response.

The move is likely to cause ripples around the world. It could also mean higher borrowing costs for developing economies, many of which are already seeing slow growth.