Gold advanced on Wednesday as traders repositioned themselves after the Federal Reserve said it will keep target interest rates unchanged for the time being. Prices held onto earlier gains after statements from the US central bank indicating that while it would leave rates unchanged, it was on track to lift borrowing costs again in December.
The Fed will leave rates unchanged at 1-1.25 percent. Gold is highly sensitive to rising US interest rates, as these lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Spot gold was 0.4 percent higher at $1,276.37 an ounce by 3:26 p.m. EDT (1926 GMT), having earlier peaked at $1,280.87. Its upward move accelerated after it broke through its 100-day moving average at $1,275 an ounce, a key chart level.
US gold futures for December delivery settled up $6.80, or 0.5 percent, at $1,277.30 per ounce. "The price action in gold was most likely positioning reversals. We saw some shorts cover and then the market came back," said Daniel Ghali, commodities strategist for TD Securities in Toronto.
Elsewhere, silver rose 2.7 percent to $17.148, after reaching $17.195, the strongest since Oct. 20, while platinum climbed 2.06 percent to $934.10 an ounce after touching $937.30, the highest since Oct. 16. Palladium surged 2.2 percent at $1,001.75 an ounce, the strongest since Oct. 16. The metal rose nearly 5 percent in October and touched a 16-year peak of $1,010.50 an ounce mid-month.
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