(Adds comment, updates graphic and prices)

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Fed cuts interest rates by 25 basis points

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US 10-year yield hits fresh four-week high

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US dollar index scales two-year peak

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Silver down more than 3%

By Brijesh Patel, Sherin Elizabeth Varghese

Dec 18 (Reuters) - Gold slipped more than 2% to a

one-month low on Wednesday after the U.S. Federal Reserve

lowered interest rates as expected, but noted it will slow the

pace at which borrowing costs fall any further, boosting the

dollar and bond yields.

Spot gold was down 2.1% at $2,589.91 per ounce by

03:56 p.m. EST (2056 GMT), its lowest level since Nov. 18. U.S.

gold futures settled 0.3% lower at $2,653.30.

"Markets are climbing a wall of worry into the close as

(Fed Chief Jerome) Powell nods to a period of slower rate cuts

predicated on further progress in inflation. Core PCE data later

this week now takes on more importance," said Tai Wong, an

independent metals trader.

"Gold is slumping below $2,600, which will worry some

nervous bulls," Wong added.

U.S. central bankers issued fresh projections indicating two

quarter-percentage-point rate cuts next year amid rising

inflation, a forecast consistent with a wait-and-see approach as

President-elect Donald Trump returns to the White House in

January.

Powell said Fed policymakers want to see more progress on

bringing inflation down as they consider future rate cuts.

Futures on the federal funds rate have priced in that the

Fed will leave its benchmark overnight rate unchanged at the

Jan. 28-29 policy meeting. Higher rates reduce the appeal of

holding the non-yielding asset.

The dollar index jumped more than 1% to a two-year high,

making gold more expensive for other currency holders, while the

benchmark U.S. 10-year yield hit a fresh four-week high.

Traders will be watching now for key U.S. GDP and inflation data

due later this week that could further shape expectations around

monetary policy.

"I do see the consolidation as a continuation pattern within

the longer-term uptrend in gold. I think that trend will

re-exert itself in the first quarter of 2025," said Peter Grant,

vice president and senior metals strategist at Zaner Metals.

Elsewhere, spot silver fell 3.5% to $29.45 per ounce,

platinum slipped 2% to $919.25, and palladium

declined 3% to $906.88.