Gold prices edged up slightly after the US Federal Reserve (Fed) raised interest rates by a quarter of a percentage point, with the precious metal’s immediate future linked to expectations of further US rate increases and uncertainty over the war in Ukraine.

Gold prices were flat after the Fed raised rates on March 16 as widely anticipated, warning of further rate rises to come in order to control surging inflation.

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the US economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity,” the Fed said in its monetary policy statement.

Gold is seen as a safe haven in inflationary times, but the rate increase erodes the appeal to investors of non-yielding bullion.

Gold also came under pressure from peace talks between Russia and Ukraine which may reduce its safe-haven appeal, but any new burst in the intensity of the war could send gold prices higher again, analysts say.

Gold was up 0.38 percent at $1,933.90 per ounce on March 17.

While the Federal Reserve did not raise rates by as much as 50 basis points, analysts said the central bank has come across as hawkish despite fears over lower economic growth.

“The Fed threw down the gauntlet as it confronted a broad inflation upsurge, twinning a widely expected and tame quarter point rate hike with a much sterner message about what lies ahead,” said Avery Shenfeld, senior economist at CIBC.

For UK-based gold savers, another consideration is the outlook for the pound with the Bank of England expected to raise interest rates further on March 17.

A 25 basis point rise in interest rates is widely anticipated, but if the UK central bank moves to hike rates by as much as 50 basis points, sterling could jump against the dollar, possibly making dollar-denominated gold more affordable to acquire in terms of the pound.

The pound has been hard hit relative to other currencies due to the intensity of the war in Ukraine, and can gain ground if peace talks between Russia and Ukraine make progress.

New talk of compromise from both sides on a status for Ukraine outside of NATO has lifted hope for a possible breakthrough after three weeks of fighting.