Investing.com -- Gold surged more than 1% on Thursday, reaching near one-month highs, as investors continued to digest dovish signals from the Federal Reserve on the gradual path of tightening it will pursue in the coming months after the U.S. central bank's latest decision to leave short-term interest rates unchanged.
On the Comex division of the New York Mercantile Exchange, gold for June delivery traded in a broad range between $1,239.00 and $1,268.45 an ounce before settling at $1,265.25, up $15.85 or 1.27%% on the session. With the sharp gains, gold has closed higher in four straight sessions and eight of the last 10. The precious metal has surged nearly 20% since the start of the year and is on pace for one of its strongest first halves in decades.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.
Market players continued to react to the Federal Open Market Committee's (FOMC) relatively dovish monetary policy statement on Wednesday when the FOMC held interest rates steady for a third consecutive meeting. In December, the FOMC abandoned a seven-year zero interest rate policy by lifting its benchmark Federal Funds Rate by 25 basis points to a target range between 0.25 and 0.50%. The move at the end of last year marked the first rate hike by the Fed in nearly a decade.
Before the FOMC meets again in June, the Committee said it will assess economic conditions, measures of labor market conditions, indications of inflationary pressures and expectations, as well as readings on financial and international developments as it determines the size of future adjustments to the Federal Funds Rate. Notably, the FOMC did not rule out a June rate hike in Wednesday's statement.
"The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run," the FOMC said in the policy statement. "However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data."
On Thursday, the CME Group's (NASDAQ:CME) FedWatch tool lowered the probability of a June rate hike to 15.0% from 100% during the previous session. The CME Group also increased the chances that the Fed will wait until September before raising rates again to 38.8%, up from 30% on Wednesday.
Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
Investors await the release of key U.S. inflation data on Friday for a more accurate gauge of price stability in the world's largest economy. In February, the Core PCE Index, remained unchanged at 1.7%, one month after soaring to its highest annual rate since late-2012. Core PCE Inflation, which strips out volatile food and energy prices, is the Fed's preferred gauge for inflation.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.55% to an intraday low of 93.66 amid the release of downbeat U.S. economic data. Earlier, the U.S. Bureau of Economic Analysis (BEA) said U.S. GDP increased by 0.5% in the first quarter, slightly below consensus forecasts of 0.7%. The dollar index remains near eight-month lows.Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for May delivery jumped 0.276 or 1.60% to $17.565 an ounce.
Copper for May delivery gained 0.006 or 0.29% to $2.231 a pound.