Gold steady after hitting 9-month peak on Fed rate freeze; eyes monthly gain

Gold prices were steady on Thursday, having earlier hit their highest in nine months, after the U.S. Federal Reserve kept interest rates steady and said it would be patient on further hikes, keeping bullion on track for a fourth straight monthly gain.

Spot gold was unchanged at $1,320.01 per ounce at 2:14 p.m. ET (1914) GMT. The session high was $1,326.30, the highest since April 26.

Spot gold has gained nearly 3 percent so far this month.

U.S. gold futures settled up 0.7 percent to $1,319.70.

"The ongoing trend in precious metals markets continues. The much more dovish-than-expected Fed stance continues to support commodity prices across the board, weaken the dollar and support the precious metals complex as well," said David Meger, director of metals trading at High Ridge Futures.

The dollar also modestly extended losses after data showed the number of Americans filing for unemployment benefits rose to a 1-1/2-year high, feeding concerns of an economic slowdown.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have climbed 4.6 percent this month, the biggest monthly gain since September 2017.

The Federal Reserve held interest rates steady on Wednesday but said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty over the U.S. economic outlook.

Analysts said market players see a much slimmer chance of a rate hike, while the U.S. Treasury yield curve now points to possible future Fed rate cuts. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

"The market now sees about a one-in-four chance of a 2019 Fed rate hike, while the curve is pointing to a small chance of a cut occurring as early as 2020," INTL FCStone analyst Edward Meir said in a note.

While the news propelled world stocks to their biggest January gains on record, risks to the global economy remain, with market participants focused on trade talks between the United States and China.

Investors worry Washington's criminal charges against Chinese company Huawei and its chief financial officer could hurt the talks.

If the sides cannot reach a deal, Washington has threatened to more than double tariffs on Chinese goods on March 2.

Global demand for gold rose 4 percent last year, as central bank purchases surged to their highest levels since 1967, the World Gold Council said.

Palladium was down 1.4 percent to $1,341.50, while platinum fell 0.1 percent to $814.00.

Silver lost 0.4 percent to $16.00, having hit its highest since July 2018, at $16.19, during the session.