Investing.com - Gold prices rose to a two-week high during Europe's session on Thursday, as the U.S. dollar sank after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold for December delivery on the Comex division of the New York Mercantile Exchange touched an intraday peak of $1,339.30 a troy ounce, the most since September 8.
It was last at $1,337.00 by 3:53AM ET (07:53GMT), up $5.95, or 0.45%, after climbing $13.20, or 1% on Wednesday.
The Fed left interest rates unchanged at the conclusion of its policy meeting on Wednesday. In addition, the U.S. central bank cut the number of rate hikes it expects this year to one from two and projected a less aggressive rise in interest rates next year and in 2018.
However, the Fed signaled that it could still tighten monetary policy before the end of the year if the job market continued to improve.
Markets are currently pricing in a 60% chance of a rate hike at December's meeting, according to Investing.com's Fed Rate Monitor Tool.
In the currency market, the U.S. dollar index, which measures the greenback's value against a basket of six major currencies, fell 0.25% to 95.22 early Thursday, well off the prior session's six-week high of 96.29.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.