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LONDON: Gold prices rose on Thursday, boosted by a fall in the US dollar after the Federal Reserve decided to cease its pandemic-era bond purchases early next year.

Spot gold rose 0.5% to 1,784.97 per ounce by 0941 GMT, while US gold futures jumped 1.2% to $1,786.00.

The Fed on Wednesday paved the way for three interest rate hikes by the end of 2022 as the economy nears full employment and the US central bank copes with a surge of inflation.

That weighed on the dollar, which is down around 0.4% against its rivals, making gold cheaper for holders of other currencies.

“The main factor today is the performance of the US dollar,” said Ricardo Evangelista, senior analyst at ActivTrades.

Moving forward, with the Fed meeting out of the way, the real impact of the Omicron coronavirus variant on economic activity is the big question mark for gold, Evangelista added.

Gold initially slipped on Wednesday after the hawkish Fed announcement, as reduced stimulus and interest rate hikes raise the opportunity cost of holding bullion, but it regained some ground after the dollar slipped.

Focus is now on the European Central Bank (ECB) which is all but certain to dial back stimulus one more notch on Thursday, while pledging to keep borrowing costs exceptionally low, sticking to its long-held view that alarmingly high inflation will abate on its own.

“The expectation (from the ECB) is for a winding back of fiscal and monetary stimulus, if this view is unchanged then it would be reasonable for gold prices to remain below $1,800,” said Michael Langford, director at corporate advisory AirGuide.

Silver rose 0.4% to $22.15 per ounce. Platinum gained 1% to $928.06, and palladium climbed 3.9% to $1,659.08.

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