Gold and the related exchange traded products, such as the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), were universally seen as vulnerable to higher interest rates prior to the Federal Reserve moving forward with such a policy on Wednesday.

In the aftermath of the Fed’s first rate hike in nearly a decade, gold ETFs have not surprised and are slumping as confirmed by a more than 2% loss for GLD on Tuesday.

Gold futures and physically-backed ETFs have been pressure this year amid speculation the Federal Reserve is preparing to raise interest rates, which has pushed the dollar higher. Higher interest rates would diminish gold’s attractiveness since the precious metal does not pay interest like fixed-income assets.

Even if rates rose a couple basis points, the continued low rate environment is good for gold, which does not pay a yield and would struggle to compete with yield-generating assets when rates rise. Making matters worse for gold ETFs are expectations for soft near-term demand at a time of year when gold demand is usually strong. [Doubters in Gold Rally]

“Gold traders have been bracing for a rate hike, so the market did not react very strongly to the news yesterday. The action of the Fed do give traders a bit of a mixed view. On one hand, the FOMC statement does not convey a sense of urgency in raising interest rates. On the other hand, the elimination of the repo cap suggests that the bank is serious about getting higher effective interest rates out there and curtailing liquidity. While the FOMC rate decision did not hurt Gold, the lack of fresh buying and soft physical demand for the metal may. ETFs may have been liquidators ahead of the meeting and there is very little investment demand for the metal at the present moment. The 8% percent global increase in Gold demand in Q3 may be more of an aberration rather than the start of a trend,” according to Options Express.