On Wednesday, the U.S. central bank kept interest rates unchanged while forecasting slower growth and higher inflation this year.
Gold fell from a new record high as doubts emerged about the Federal Reserve's ability to significantly cut interest rates this year in the face of President Donald Trump's potentially inflationary trade tariffs.
Gold retreated after reaching a high of US$3,057 an ounce on Thursday as the dollar strengthened. A stronger dollar is an adverse factor for the precious metal. On Wednesday, the U.S. central bank kept interest rates unchanged, while forecasting slower growth and higher inflation this year.
Federal Reserve Chairman Jerome Powell acknowledged a high degree of uncertainty over President Donald Trump's policy changes, but said there is no rush to tighten monetary policy. Trump, meanwhile, said the Fed should lower borrowing costs.
Gold has risen 16% this year in a rally that has taken it to a series of record highs, extending last year's strong gains as investors seek safety. Several major banks have also raised their price targets for gold in recent weeks, with Macquarie Group forecasting it could rise as high as US$3,500 an ounce.
Spot gold was down to US$3,031.66 an ounce at 11:44 a.m. in London, after rising more than 2% in the previous three sessions. The Bloomberg Dollar Spot index was up 0.3%. Silver, platinum and palladium fell.
Jack Ryan - Sybilla Gross, Bloomberg Online