Gold futures settled at a one-week high on Thursday, buoyed by the Federal Reserve's dovish policy statement, though strength in the dollar kept prices in check.
On Wednesday, after gold futures settled, the central bank left interest rates unchanged as expected and signaled no further increase in interest rates this year and just one in 2020, according to its new 'dot plot,' and the bank said it would end its balance-sheet runoff by September.
The dollar declined shortly after the news, but has recovered its post-Fed loss and moved sharply higher in Thursday dealings. The precious metals that are priced in the U.S. unit continued to rise, but finished off the session's highs.
See: Blog covering Fed decision and Powell press conference
Gold for April delivery GCJ9, +0.47% rose $5.60, or 0.4%, to settle at $1,307.30 an ounce on Comex, after trading as high as $1,320.20. The settlement was the highest since March 13 for a most-active contract, FactSet data show.
The dollar, as measured by the ICE U.S. Dollar Index DXY, +0.64%was up 0.8%. A stronger dollar can dull investment interest in dollar-denominated prices of gold from investors using other currencies, and vice versa.
The SPDR Gold Shares ETF GLD, +0.23% was down 0.6%.
"The accommodative stance by the Fed and dovish shift in rate hike expectations is bullish for gold as interest rates declined across the board" Wednesday, said Tyler Richey, co-editor of the Sevens Report. "This adds to the recent trend of declining real rates and that is decidedly positive for gold."
"It's becoming increasingly likely that gold will test multi-year highs in the mid-$1,300s again in the coming weeks," he added.
Despite the more dovish Fed, U.S. stocks closed lower Wednesday as President Trump said he would keep tariffs on China even after a trade agreement had been reached to make sure the country is adhering to the terms of any trade deal. Benchmark stock indexes moved higher Thursday.
Silver climbed along with gold Thursday. May silver SIK9, -0.01% added 0.8% to $15.437 an ounce, but May copper HGK9, -1.98% lost 0.5%, to $2.906 a pound.
April platinum PLJ9, -1.50% settled at $861.10 an ounce, up 0.2%, while June palladium PAM9, -2.37% gave up earlier gains, losing 0.2% to $1,557.90 an ounce after posting a string of three consecutive record settlements.
Earlier, the platinum and palladium markets saw some fresh buying "off the dovish Fed result, but rallies in both markets were well underway ahead of the Fed event," said analysts at Zaner Precious Metals, in a note.
"While many auto sector analysts still suggest a switch from palladium to platinum is difficult to engineer quickly, the market is now being presented with chatter of a rotation of catalytic converter feedstock," they said. "Earlier this week, the palladium market was $706 an ounce above the price of platinum and that is a huge incentive to consider alternative autocatalyst feedstock supply." That could hurt demand for palladium in favor of platinum.
Palladium is mostly used in pollution-controlling catalytic converters on gasoline-powered vehicles.
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