Investing.com - Gold futures climbed to a one-week high in European trade on Thursday, as the U.S. dollar tumbled against the yen after the Bank of Japan surprised markets by keeping monetary policy steady.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to 93.79 in early trade, a level not seen since April 12. It last stood at 93.81, down 0.6% for the day.
The dollar was down nearly 3% against the yen at 108.41 after the BoJ held monetary policy steady, quashing speculation that it would ramp up its already extensive easing program.
The greenback was already on the defensive after the Federal Reserve left interest rates unchanged following its two-day meeting on Wednesday and issued a statement implying it was in no hurry to raise rates.
Offering little hope of a move in June, the Fed said U.S. "economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate."
Market analysts expect two more rate hikes this year but futures prices show traders do not expect a hike until at least September, according to CME Group's (NASDAQ:CME) FedWatch tool.
With the Fed meeting out of the way, attention now shifts to first-quarter U.S. economic growth data due later in the session, amid expectations for an expansion of 0.7%.
Gold for June delivery on the Comex division of the New York Mercantile Exchange inched up $6.25, or 0.5%, to trade at $1,256.65 a troy ounce by 06:38GMT, or 2:38AM ET, after hitting a daily peak of $1,257.10, the most since April 21. On Wednesday, gold tacked on $7.00, or 0.56%.
Prices of the yellow metal are up nearly 18% so far this year as expectations faded that the Fed would move to normalize interest rates due to fears over a China-led global economic slowdown.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Elsewhere on the Comex, silver futures for May delivery tacked on 7.6 cents, or 0.44%, to trade at $17.36 a troy ounce during morning hours in London, while copper futures declined 1.2 cents, or 0.54%, to $2.220 a pound.