BENGALURU: Gold prices extended gains on Thursday to their highest in a week after the US Federal Reserve signalled that its interest rate-hiking policy is at an end and that it sees lower borrowing costs in 2024, which sent the dollar and Treasury yields lower.

Spot gold was 0.4% higher at $2,034.58 per ounce as of 1216 GMT, after surging 2.4% on Wednesday. US gold futures jumped 2.6% to $2,049.50.

“Market participants perceived the Fed as dovish, focusing on talks of lower US interest rates next year, and lower rates prospects are lifting the yellow metal,” UBS analyst Giovanni Staunovo said.

“We retain a positive outlook for gold, targeting a price of $2,250 per ounce by end 2024.”

Seventeen of 19 Fed officials projected lower interest rates by end-2024 after the US central bank kept interest rates steady for the third meeting in a row, as was widely expected.

The dollar slipped to a four-month low, making gold cheaper for non-dollar buyers, while the US benchmark 10-year yields dropped to its lowest levels since late-July.

Lower US interest rates put pressure on the dollar and bond yields, and increase the appeal of non-yielding bullion. Markets are now pricing in a chance of about 89% of a rate cut in March from the Fed, according to CME FedWatch tool.