Spot gold was up 1.2% at $2,691.36 per ounce, after dropping to a three-week low on Wednesday. U.S. gold futures settled 1.1% higher at $2,705.80.
At the end of a two-day policy meeting, the U.S. central bank lowered the benchmark overnight interest rate to the 4.50%-4.75% range, with policymakers taking note of a job market that has “generally eased”.
Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
“Gold remains in a strong bull market and no event this week, from the election to today’s Fed decision, is likely to change that,” said Tai Wong, an independent metals trader. “Unless Powell leans towards a pause today, gold is likely to take back yesterday’s knee-jerk losses.”
The dollar index was down 0.6% against its rivals after rising to a four-month high after Republican former President Donald Trump’s win in Tuesday’s presidential election.
Traders are currently pricing in another 25 basis point cut by the Fed in December, according to LSEG data.
With Trump’s impending return to power, “any future rate reductions could well be more difficult to achieve due to concerns that higher prices and stickier inflation force central banks to keep policy restrictive for longer than they would like,” independent analyst Michael Hewson wrote in a note.
Elsewhere, spot silver rose 1.8% to $31.71 per ounce, platinum gained 0.6% to $992.65 and palladium shed 1.3% to $1,021.25.