Gold prices rose to a three-week peak on Thursday as the U.S. Federal Reserve ruled out chances of any interest rate hike this year, while a surprise cut in U.S. growth forecast added to concerns on global economic slowdown.
Meanwhile, palladium scaled an all-time high on prolonged supply deficit in the market.
Spot gold gained 0.5 percent to $1,318.46 per ounce as of 0509 GMT, after touching its highest since Feb. 28 at $1,319.02 earlier in the session.
U.S. gold futures jumped 1.3 percent to $1,318.30 an ounce.
Having downgraded the U.S. growth, unemployment and inflation forecasts, the Fed brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year.
“The Fed was even more dovish than expected and that added to concerns that U.S. growth, and therefore global growth, is hitting a patch of weakness,” said Kyle Rodda, a market analyst with IG Markets in Melbourne.
“U.S. dollar is well off its highs from yesterday and is relatively soft. Treasury yields are coming down which means going into bonds or assets of that nature yields less and gold becomes more attractive.”
The dollar fell sharply and U.S. Treasuries rallied on Wednesday, taking the benchmark 10-year yield to a 14-month low.
Lower interest rates weigh on the dollar and bond yields, increasing the appeal of non-interest bearing bullion.
“We remain optimistic on (gold’s) safe haven appeal as global economic indicators have pointed towards flagging global growth prospects and heightened geopolitical risks in the current term,” Philip Futures analyst Benjamin Lu said in a note.
Gold is often used as a hedge against political and financial risks.
UK Prime Minister Theresa May made an impassioned appeal to British lawmakers to support her on Wednesday after the European Union said it could only grant her request to delay Brexit for three months if parliament next week backed her plans for leaving.
Among other precious metals, spot palladium rose about 0.9 percent to $1,617.50 per ounce, after touching an all-time high of $1,619.81 earlier in the session.
The risk of a ban on some exports from major producer Russia added to concerns in an already tight market and pushed prices to record levels, analysts said.
This also helped platinum register its highest since March 1 at $871.25.
The metal was on track for its fifth straight session of gains, up 0.6 percent at $864.35 per ounce.
Platinum and palladium are used as emissions cutting autocatalysts.
Silver, meanwhile, gained about 0.8 percent to $15.56 an ounce.
Source: Reuters
