Gold prices rose on Thursday after comments by U.S. Federal Reserve Chair Jerome Powell cemented hopes around a lower interest rate environment, while prospects of more U.S. stimulus further lifted bullion's appeal as an inflation hedge.
Spot gold rose as much as 0.8% following Powell's comments and was up 0.3% at $1,848.22 per ounce. U.S. gold futures settled 0.2% lower at $1,851.40 per ounce.
Powell said an interest rate hike is coming "no time soon" and pushed back against suggestions that the central bank might start tapering its bond purchases any time soon.
"Powell pretty much confirmed the bank's dovish stance. ... You're going to see that the Fed is going to remain ultra-accommodative and that's why gold prices are rising," said Edward Moya, senior market analyst at OANDA.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.
In the wake of Powell comments, the dollar index edged lower, making gold cheaper for holders of other currencies. Meanwhile, the number of Americans filing first-time applications for unemployment benefits surged last week.
"This significant jump is reminding everyone that the labor market situation is still dire, and it's going to warrant more stimulus," Moya said, adding that concerns over the coronavirus pandemic remained supportive for gold.
U.S. President-elect Joe Biden is scheduled to unveil a stimulus package proposal on Thursday that could exceed $1.5 trillion.
While gold is considered a hedge against the inflation and currency debasement that can result from widespread stimulus, a recent jump in bond yields has challenged that status as it increases the opportunity cost of holding non-yielding bullion.
Treasury yields shot higher since the past week on expectations for the fresh stimulus and held close to 10-month highs.
In other metals trading, silver gained 1.7% to $25.57 an ounce, platinum climbed 1.5% to $1,109.98 per ounce and palladium was up 0.3% at $2,391.08 per ounce.