Gold prices extended gains to a second straight session on Thursday, boosted by a slide in the U.S. dollar and Treasury yields after the Federal Reserve signaled an end to its monetary tightening cycle might be on the cards.
Spot gold last rose 1.18% to $1,992.81 per ounce, while U.S. gold futures jumped 2.4% to settle at $1,995.90.
The Fed raised rates by a quarter of a percentage point on Wednesday but highlighted that it was on the verge of pausing.
"If they truly do pause that clearly has been a green light for the gold market, being a quintessential hedge against inflation. It's likely that inflation would remain elevated if they're unable to raise rates any further," said David Meger, director of metals trading at High Ridge Futures.
Gold on Monday hit a one-year high, breaching the key $2,000 level on safe-haven demand, though later ceded some ground as banking sector jitters subsided following the rescue of Credit Suisse. But the outlook remains positive if the Fed pauses or the banking crisis carries on, analysts say.
Wall Street bank Goldman Sachs hiked its 12-month gold price target to $2,050 an ounce from $1,950, describing it as the best hedge against financial risks.
"A combination of inflation still being at lofty levels, safe haven alternative investment demand, and the weaker dollar - all of these are significant driving factors behind gold's recent move," Meger added.
The dollar was near early-February lows, sliding for a sixth session and making gold cheaper for holders of other currencies. Benchmark government bond yields also edged lower and improved zero-yield bullion's allure.