Gold reversed losses to climb to its highest level in a week on Thursday, as the US dollar slumped more than 2 percent against the yen after the Bank of Japan surprised markets by keeping monetary policy steady. At a two-day rate review ending on Thursday, the BOJ decided to maintain its pledge to increase base money at an annual pace of 80 trillion yen ($732 billion). It also left unchanged a 0.1 percent negative interest rate it applies to some of the excess reserves that financial institutions park at the BoJ.
Spot gold rose to a one-week high of $1,256.60 an ounce, after dropping 0.7 percent earlier in the session. Traders said the metal was tracking the dollar/yen move after a Federal Reserve statement on Wednesday that provided few clues on the US central bank's monetary policy outlook.