Gold prices touched a 10-day high on Thursday as the U.S. dollar and Treasury yields were beaten lower after the Federal Reserve signalled an end to its monetary policy tightening cycle.
Spot gold rose 0.5% at $2,036.69 per ounce as of 12:33 p.m. ET (1733 GMT). U.S. gold futures jumped 2.7%, to $2,051.20.
"Fed's dovish pivot was telegraphed over yesterday's FOMC meeting and very pragmatically gave a green light for markets to price in a more aggressive Fed cutting cycle on the horizon, and we expect that the market will run with it," said Daniel Ghali, commodity strategist at TD Securities.
"This is extremely positive for gold prices, given that investor demand was one of the missing pieces for the rally to new all-time highs to be sustained."
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.
The dollar slipped to a four-month low, while the U.S. benchmark 10-year yield dropped to its lowest level since late July.
Seventeen of 19 Fed officials projected lower interest rates by end-2024, after the Fed kept interest rates steady for the third meeting in a row, as was widely expected.
Markets are now pricing in around an 83% chance of a rate cut in March from the Fed, according to the CME FedWatch tool.
The European Central Bank also left interest rates unchanged as expected on Thursday. Spot silver rose 1.7% to $24.15 per ounce, and platinum gained 2.8% to $960.40.
Palladium climbed 11.3%, to $1,104.76, after hitting a more than a five-year low, earlier this month.
After FOMC, the yield curve started to roll over and investors rushed to buy commodities, which is a major driver for the rise in palladium, said Daniel Pavilonis, senior market strategist at RJO Futures.