By Anjana Anil
(Reuters) – Gold prices extended gains on Thursday, after the U.S. Federal Reserve signalled an end to its tightening cycle and lower borrowing costs in 2024, which sent the dollar and Treasury yields lower.
Spot gold was 0.6% higher at $2,037.69 per ounce as of 0927 GMT, after surging 2.4% on Wednesday. U.S. gold futures jumped 2.8% to $2,052.50.
“Market participants perceived the Fed as dovish, focusing on talks of lower U.S. interest rates next year, and lower rates prospects are lifting the yellow metal,” said UBS analyst Giovanni Staunovo.
“We retain a positive outlook for gold, targeting a price of $2,250 per ounce by end 2024,” he added.
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 89% chance of a rate cut in March from the Fed, according to the CME FedWatch tool.
Lower U.S. interest rates put pressure on the dollar and bond yields, and increase the appeal of non-yielding bullion.
The dollar slipped to a four-month low, making gold cheaper for non-dollar buyers, while the U.S. benchmark 10-year yields dropped to its lowest levels since late-July. [USD/] [US/]
“The outlook for gold remains positive and we see the all time high being refreshed in the New Year as sentiment improves,” said independent analyst Ross Norman.
Market participants now await other central bank decisions, including the European Central Bank and the Bank of England, due later in the day.
Spot silver rose 1.4% to $24.08 per ounce, platinum gained 0.9% to $942.20 and palladium climbed 2.2% to $1,013.93.
(Reporting by Anjana Anil in Bengaluru; Editing by Varun H K)
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