Investing.com - Gold prices extended overnight gains during North America's session on Thursday, touching a fresh two-week peak as the U.S. dollar sold off after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.
Gold for December delivery on the Comex division of the New York Mercantile Exchange jumped to an intraday peak of $1,342.05 a troy ounce, the most since September 8.
It was last at $1,340.85 by 8:35AM ET (12:35GMT), up $9.45, or 0.71%, after climbing $13.20, or 1% on Wednesday.
The Fed left interest rates unchanged at the conclusion of its policy meeting on Wednesday, but hinted that a hike could come in December if the job market continued to improve.
At the same time, the U.S. central bank also cut the number of rate hikes it expects next year and in 2018, according to the median projection of forecasts released with its post-meeting statement.
The Fed has policy meetings scheduled in early November and mid-December. Economists believe policymakers would avoid a rate hike in November in part because the meeting falls just days before the U.S. presidential election.
Markets are currently pricing in a 15% chance of a rate hike at November's meeting, according to Investing.com's Fed Rate Monitor Tool. For December, odds stood at around 60%.
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.
In the currency market, the U.S. dollar index, which measures the greenback's value against a basket of six major currencies, fell 0.45% to 95.05 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.