By Arpan Varghese
(Reuters) - Gold hit a one-week high on Thursday after the U.S. Federal Reserve signaled a cautious stance on interest rate policy this year, pushing the dollar to its lowest in a month.
The Fed on Wednesday raised interest rates for the second time in three months, with officials sticking to their outlook for two more rate hikes this year and three more in 2018.
Fed Chair Janet Yellen said that the central bank would stick to a gradual path of interest rate rises even if inflation runs above its 2 percent target.
"The lack of signs of further tightening have seen gold prices jump quite drastically post the meeting," said ANZ analyst Daniel Hynes.
Spot gold rose 0.5 percent to $1,224.70 per ounce at 0313 GMT after touching $1,225.76, the highest since March 7, earlier in the session.
U.S. gold futures for April delivery, which ended their trading day on Wednesday before the Fed statement was delivered, were up 2 percent at $1,225 an ounce.
The dollar index was down 0.1 percent at 100.63, having earlier fallen to 100.43, the lowest in a month.
The euro strengthened against the U.S. currency after early returns showed the Netherlands' centre-right Prime Minister Mark Rutte had roundly seen off a challenge by anti-Islam, anti-EU Geert Wilders in an election on Wednesday, a huge relief to other EU governments facing a wave of nationalism.
Prices of the yellow metal could find further support from uncertainty over other elections in Europe, analysts said.
"It looks like the worst case scenario in terms of uncertainty in the Dutch elections has passed, but the market will be looking at the French election coming up relatively soon as well," Hynes said.
"However, we would need to see the far right in particular really gather strong resolve from those elections to see gold prices being pushed even higher."
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.53 percent to 839.43 tonnes on Wednesday.
Inflows into the fund so far this week have already nearly erased last week's outflows.
Spot gold is expected to test a resistance at $1,229 per ounce, a break above which could lead to a gain to the next resistance at $1,237, according to Reuters technical analyst Wang Tao.
In other precious metals, spot silver rose 0.5 percent to $17.39 per ounce, after hitting its highest in a week at $17.48 earlier in the session.
Platinum was up 1.5 percent at $962.99 per ounce, close to $968.20, its highest since March 7, hit earlier in the day.
Palladium climbed 0.6 percent to $767.50 per ounce.
(Reporting by Arpan Varghese and Nallur Sethuraman in Bengaluru; Editing by Richard Pullin)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)