Gold rallied more than 1.5 percent to a one-week high on Wednesday, as the US Federal Reserve called for gradual monetary tightening after raising interest rates by an expected 25 basis points for the second time in three months.
The central bank said in its policy statement that further hikes would only be "gradual," with officials sticking to their outlook for two more rate hikes this year and three more in 2018.
The US dollar index fell to a two-week low, helping lift gold which is denominated in dollars and so became cheaper for holders of other currencies, while the 10-year Treasury yields tumbled and US stock markets extended gains.
Spot gold was up 1.6 percent at $1,217.81 an ounce by 3:01 p.m. EDT (1901 GMT), after rising to $1,219.36, the highest since March 7. It was on track for its biggest one-day jump since September.
US gold futures, which closed ahead of the Fed statement, settled down 0.2 percent at $1,200.70.
"After loitering around $1,200 for most of the session, gold surged smartly higher after the FOMC only lifted its weighted projections by a marginal 9 basis points in 2018 and 2019," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
"The Fed seems clearly happy to be an indulgent parent couching the rate hike in the gentlest terms possible."
Gold is highly exposed to interest rates, as rising rates lift the opportunity cost of holding non-yielding bullion.
Silver rose 2.3 percent at $17.22 an ounce.
Platinum was up 2 percent at $951 per ounce while palladium was up 2.2 percent at $760, after tapping a 10-week low.
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