Gold eyes fourth month of gains as U.S. Fed pauses rate hikes

By Arijit Bose

(Reuters) - Gold rose to its highest in nine months on Thursday, after the U.S. Federal Reserve paused its monetary tightening cycle, denting the dollar and putting bullion on track for its fourth straight monthly gain.

Spot gold was up 0.3 percent to $1,322.81 per ounce at 1311 GMT, having earlier touched its highest since May 11 at $1,324.67. U.S. gold futures rose almost 1 percent to $1,322.50. Spot gold has gained over 3 percent so far this month.

"Supporting gold is the double whammy of lower dollar and the (Fed decision on) U.S. interest rates," said ABN AMRO analyst Georgette Boele. Late on Wednesday, the Fed offered no alterations to its interest rate outlook, instead stating that the case for further rate increments had "weakened" in recent weeks.

Gold tends to rise on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

On the technical front, "resistance for short term should be $1,330. If gold exceeds that, the market can expect to see $1,350 very soon," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

The dollar index, which measures the greenback against a basket of currencies, fell after the Fed's cautious statement, making the metal potentially cheaper for holders of other currencies.

The news also propelled world stocks to their best January on record, indicating improved risk appetite, limiting gold's advance.

However, risks to the global economy remain, with market participants closely tracking high-level trade talks between the United States and China that began on Wednesday.

Investors are now worried Washington's criminal charges against Chinese company Huawei and its chief financial officer could hurt the talks.

If the two sides cannot reach a deal soon, Washington has threatened to more than double tariffs on Chinese goods on March 2.

Also in focus is U.S. non-farm payrolls data due Friday, which follow better-than-expected numbers from payrolls processor ADP.

Underscoring investor interest in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have climbed 4.6 percent so far this month, the biggest monthly gain since September 2017.

Global demand for gold rose 4 percent last year, helped by a surge in central bank purchases to their highest levels since 1967, the World Gold Council said.

Elsewhere, palladium gained 1.5 percent to $1,382, while platinum rose 0.5 percent to $818.65.

Silver rose 0.2 percent to $16.09, having hit its highest since July 2018, at $16.12, earlier in the session.

(Reporting by Arijit Bose in Bengaluru; Editing by Mark Potter)