Investing.com - Gold prices rose to the highest level since mid-June in North American trade on Thursday, as a softening in the Federal Reserve's confidence on inflation added to expectations that policy tightening would be glacial at best.
Comex gold futures were at $1,263.99 a troy ounce by 9:00AM ET (1300GMT), up $14.30, or about 1.2%. It touched its highest since June 15 at $1,265.14 earlier in the session.
Gold prices fell for a third-straight session on Wednesday, before turning higher in post-settlement trade as the U.S. dollar weakened in the wake of the Fed’s dovish policy statement.
While the Fed said it expected to start shrinking its massive holdings of bonds "relatively soon", the central bank also noted weakness in U.S. inflation more explicitly than before.
The recognition of soft inflation added to expectations that the Fed's plan to raise interest rates a third time this year might be delayed.
According to Investing.com’s Fed Rate Monitor Tool, conviction for another rate hike before the end of the year has faded, with less than 40% of market players expecting another move by December.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Data released earlier did little to sway the Fed's view on monetary policy.
New orders for key U.S.-made capital goods unexpectedly fell in June, but a fifth straight monthly increase in shipments suggested that business spending on equipment supported economic growth in the second quarter.
A separate report showed that the number of Americans filing for unemployment benefits rebounded from a three-month low last week, but remained below a level consistent with a tightening labor market.
Meanwhile, focus will continue to be on headlines coming out of Washington, where the Senate is expected to continue working to repeal Obamacare.
Elsewhere on the Comex, silver futures rallied 30.9 cents, or roughly 1.9%, to $16.76 a troy ounce. It climbed to $16.79 earlier, a level not seen since June 29.
Meanwhile, copper futures held near their highest level in more than two years amid talk China may ban imports of some scrap metal from the end of 2018.
That could lead to higher refined copper imports into the world's largest consumer of the metal.