Gold surges after Fed removes 'patient' from statement

Gold prices jumped on Wednesday, after the Federal Reserve dropped the word "patience" from its policy statement, stoking expectations for a mid-year rise in U.S. interest rates.

As the global investment community focused its attention on the U.S. central bank, the Fed Open Market Committee lived up to expectations: It dropped the word "patient" from its post-meeting statement, an indication, subtle though it may be, that the era of zero interest rates is about to end.

Spot gold was up 2.1 percent to $1,172.30 an ounce, above its lowest since Nov. 7 at $1,142.86, hit on Tuesday.

U.S. gold futures for April delivery settled up 0.3 percent at $1,151.30 an ounce.

"We have a bearish view, especially longer term, as the global economy is incrementally improving and growth risks are reduced, which means that there are simply fewer reasons to buy gold as a safe haven," said Norbert Ruecker, Julius Baer's head of commodity research.

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The dollar was down 0.4 percent against a basket of currencies, while European shares rose, though Wall Street traded lower.

Gold, a non-interest yielding asset, has dropped 3 percent since the start of the year on expectations for a U.S. rate rise.

While the U.S. economy has been strengthening, as evidenced by a firming labor market, the housing sector remained weak, suggesting that the Fed is unlikely to engage in an aggressive rate-rise cycle after an initial increase.

Data on Tuesday showed that U.S. housing starts plunged to their lowest level in a year in February.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.4 percent to 747.98 metric tons on Tuesday.

CNBC contributed to this report.