Investing.com - Gold prices soared to the highest level in six weeks in European trade on Thursday, after the Federal Reserve's more cautious wording on the U.S. inflation outlook added to expectations that policy tightening would be glacial at best.
Comex gold futures were at $1,262.82 a troy ounce by 3:00AM ET (0700GMT), up $13.60, or about 1.1%. 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.
The dollar index fell to a 13-month low, while Treasury yields slipped, as investors wagered policy tightening in the U.S. would be glacial at best.
Traders will eye data from the U.S. due later in the session to gauge the strength of the world's largest economy and how it will impact the Fed's view on monetary policy.
Durable goods and weekly jobless claims are both due at 8:30AM ET (1230GMT).
Focus will also 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 21.6 cents, or roughly 1.3%, to $16.67 a troy ounce. It climbed to $16.73 earlier, a level not seen since June 29.
Among other precious metals, platinum was up 1% at $931.80, while palladium added 0.5% to $867.05 an ounce.
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.