1st LD Writethru: Gold down sharply after Fed rate hike

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Thursday after the U.S. Federal Reserve raised interest rates.

The most active gold contract for February delivery fell 27.2 U.S. dollars, or 2.54 percent, to settle at 1,049.60 dollars per ounce.

Gold was put under intense pressure as the U.S. central bank raised its key interest rate from 0.00-0.25 to 0.25-0.50 after the Federal Open Market Committee (FOMC) meeting on Wednesday.

An increase in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest.

There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

The U.S. Dollar Index, a measure of the dollar against a basket of major currencies, rose Thursday.

Analysts believe that the long-term trend for gold remains strongly bearish as the Fed interest rate increase came despite expectations for a delay in the rate hike until 2016.

Silver for March delivery shed 54.5 cents, or 3.83 percent, to close at 13.703 dollars per ounce. Platinum for January delivery fell 31.3 dollars, or 3.57 percent, to close at 844.70 dollars per ounce. Endit