Gold prices fell 1% on Thursday, as the U.S. dollar rallied and the Federal Reserve flagged more large rate hikes, diminishing the zero-yielding metal’s appeal.

Spot gold was down 0.8% at $1,660.55 per ounce, as of 335 GMT. U.S. gold futures were down 0.4% at $1,668.20.

“The stage setting from FOMC (Federal Open Market Committee) suggests that there’s quite a bit more room for real rates to keep going higher and that’s not an environment very gold-supportive,” said Ilya Spivak, a currency strategist at DailyFX.

A convincing break of the $1,650 level could push gold towards $1,600 and test below that in relatively short time, Spivak said.

The Fed hiked interest rates by 75 basis points for a third straight time on Wednesday and Chair Jerome Powell said bringing down inflation was their “overarching focus.”

The Fed also sees its policy rate rising at a faster pace and to a higher level than expected, the economy slowing and unemployment rising.

“The hawkish Fed projections are a rather grim outlook for the economy and that could eventually trigger a resumption of a safe-haven role for gold,” Edward Moya, a senior analyst with OANDA, said in a note.

“Gold will remain vulnerable to selling pressure if inflation does not continue to ease, but it could start to stabilize now.”

Even though gold is seen as a hedge against inflation and economic uncertainties, investors may favor other interest-yielding assets in a high-interest rate environment.

The dollar rallied to a new two-decade high, making the greenback-priced metal more expensive for buyers holding other currencies.

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 30,612,850 ounces on Wednesday, its lowest since March 2020.

Spot silver shed 1.2% to $19.36 per ounce, platinum slipped 0.6% to $902.02 and palladium fell 0.4% to $2,145.60.