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Gold prices slumped to an over four-month low overnight after the US Federal Open Market Committee (FOMC) axed any hopes for a rate cut in the near term, subduing demand for the non-interest bearing bullion.

Spot gold was down 0.5 per cent at $US1,270.22 per ounce after touching its lowest since end-December 2018 at $US1,265.85 earlier in the session.

US gold futures settled down one per cent at $US1,272 an ounce.

“A lot of people were positioned for the FOMC statement to be little bit more dovish than it actually was,” said Fawad Razaqzada, market analyst with Forex.com.

“We have seen an implied odds of a 2019 rate cut fall from 75 per cent to 50 per cent so people are revising their rate cut expectations as the Fed was not as dovish as people expected.”

The Federal Reserve kept the benchmark interest rate unchanged on Wednesday, in line with the market’s expectations.

However, market participants were taken by surprise when the central bank emphasised it had no compelling reason to consider a rate cut any time soon, citing rising employment and economic growth.

Also weighing on gold was the US dollar, which gained 0.1 per cent against key rivals on the Fed’s comments, making gold costlier for investors holding other currencies.

Higher interest rates increase the opportunity cost of holding non-yielding gold and tends to boost the US dollar.

“Market participants are now looking out for the U.S. non-farm payrolls data on Friday and if we break out over 200,000 (jobs) then that will put additional pressure on gold,” said Phillip Streible, senior commodities strategist at RJO Futures.

Economists polled by Reuters are expecting total non-farm employment to have increased by 185,000 jobs in April.

Investors are also closely monitoring the US-China trade talks, anticipating a quick resolution to the year-long tit-for-tat tariff war.

Any positive news from the negotiations tend to boost appetite for riskier assets, denting gold’s safe-haven appeal.

Elsewhere, silver fell 0.5 per cent to $US14.60 an ounce, holding close to a more than four-month low of $US14.52 touched earlier in the session.

Platinum slipped 2.1 per cent to $US845.49, after touching its lowest in a month.

Palladium was steady at $US1,352.28 per ounce, having touched its lowest since January 25 at $US1,309.67 in the previous session.