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NEW YORK: Gold gained more than 1% on Thursday, buoyed by weakness in the dollar after the US Federal Reserve sped up the withdrawal of its pandemic-era stimulus in a move largely priced in by bullion investors.

Spot gold was 1.1% higher at 1,796.47 per ounce by 10:37 a.m. ET (1537 GMT). US gold futures jumped 1.9% to $1,797.40.

The dollar slipped, making gold cheaper for holders of other currencies and helping bullion gain despite a bounce in riskier assets as the Fed prepared to tame rising prices.

Apart from a weaker dollar, “there are multiple supportive elements for gold, including geopolitical issues and pent-up physical demand,” StoneX analyst Rhona O’Connell said.

The Fed on Wednesday paved the way for three interest rate hikes by the end of 2022.

“The market has had almost four weeks in which to absorb the change in politics from the Fed (since Powell talked about dropping the term transitory inflation and became more hawkish), so this time it really was ready for it,” O’Connell said.

Gold initially slipped after the Fed announcement, as interest rate hikes raise the opportunity cost of holding bullion, before bouncing back.

“Gold prices are likely to attempt another breach of $1,800 next year as the US dollar is likely to weaken and real yields remain negative,” Standard Chartered said in a note.

But analysts at UBS warned on Wednesday gold may head lower next year amid the Fed policy tightening.

Other metals also followed gold, with palladium leaping 7.8% to $1,721.67. Silver rose 2% to $22.49 per ounce, while platinum gained 1.7% to $934.05.

Metals Focus forecast palladium to average $2,170 in 2022, predicting a tightening of the autocatalyst market towards the end of the year amid a recovery in vehicle production.

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