- Spot gold was up 0.5pc to $1,874.14 per ounce at 1030 GMT, having hit a near one-month high of $1,882.76 earlier in the session. U.S. gold futures were up 1.1pc to $1,878.50.
Gold prices rose as much as 1pc on Thursday as the dollar index extended its slide on progress with U.S. stimulus plans and the Federal Reserve's commitment to pump more cash into the economy and keep interest rates low.
Spot gold was up 0.5pc to $1,874.14 per ounce at 1030 GMT, having hit a near one-month high of $1,882.76 earlier in the session. U.S. gold futures were up 1.1pc to $1,878.50.
"The Fed's decision clearly indicates that it is not convinced of an economic recovery yet," Quantitative Commodity Research analyst Peter Fertig said.
"Given, the stand of the Fed and other central banks, there are indications that inflation will go up in future and with the dollar index down quite a bit, gold looks like an attractive investment."
Legislators said on Wednesday, U.S. congressional negotiators were "closing in" on a $900 billion COVID-19 assistance package planned to provide $600-$700 stimulus checks for individuals, dragging the dollar to a more than two year low.
The Fed has also vowed to maintain its bond-buying policy until the U.S. economic recovery is secure.
"If the central banks keep tolerating a higher inflation level, it will bring down real rates further, helping reduce the opportunity cost of holding gold," said Ravindra Rao, vice president, commodities at Kotak Securities.
Investors are now eyeing the Bank of England's policy decision, due at 1200 GMT, where it is expected to refrain from further stimulus.
"Fundamentally, gold is still quite strong and if it closes above $1,880 an ounce today we might see it going up to $1,950 before the year ends," Rao said.
In other metals, silver rose 1.2pc to $25.65 an ounce.
Platinum gained 1.6pc to $1,050.83 and palladium was up 0.9pc to $2,347.65.