The price of gold fell to an eight-month low Wednesday after the Federal Reserve increased its estimate for the target rate on overnight loans between banks amid signs that the U.S. economic recovery is gaining traction.

Fed Chair Janet Yellen and policy makers are debating how much longer to keep interest rates near zero percent as they get closer to their goals for full employment and stable prices. The officials raised their median estimate for the federal funds rate at the end of 2015 to 1.375 percent from 1.125 percent in June.

The Fed reduced monthly bond purchases to $15 billion, keeping it on track to announce an end to the program in October. Spot gold dropped in the four of the past five weeks as equities surged and inflation remained low. The cost of living in the U.S. unexpectedly dropped in August for the first time in more than a year, a Labor Department report showed Wednesday.

“Higher rates are becoming a reality,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview. “The sentiment is turning very very bearish.”

Gold for immediate delivery fell 1 percent to $1,223.35 an ounce at 4:15 p.m. New York time after touching $1,221.54, the lowest since Jan. 8. Through Tuesday, the metal had climbed 2.8 percent this year.

Inflation Target

“Inflation has been running below the committee’s 2 percent objective,” Yellen said at a press conference after a meeting of the Federal Open Market Committee.

Before the Fed announcement, gold futures for December delivery fell 0.1 percent to close at $1,235.90 on the Comex in New York.

The metal tumbled 28 percent in 2013, ending a 12-year rally, on expectations that the Fed would scale back stimulus.

Tuesday, holdings in exchange-traded products backed by gold fell 6.2 metric tons to 1,707.5 tons, the lowest since October 2009, data compiled by Bloomberg show.

Silver futures for December delivery rose 0.1 percent to $18.734 an ounce on the Comex.

On the New York Mercantile Exchange, platinum futures for October delivery fell 0.4 percent to $1,362.20 an ounce.

Palladium futures for December delivery dropped 0.6 percent to $839.05 an ounce.