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Gold slips on profit-taking after Fed-driven rally

FILE PHOTO: Gold anodes are pictured at Swiss refinery Metalor in Marin

By Harshith Aranya

(Reuters) – Gold eased on Thursday as investors booked profits after prices rose to a more than a one-week high on bleak economic projections from the U.S. Federal Reserve.

Spot gold was down 0.2% to $1,732.39 per ounce by 0329 GMT, after hitting its highest level since June 2 at $1,739.68 earlier in the session. U.S. gold futures climbed 1.2% to $1,741.80.

On Wednesday, spot gold prices rose 1.3%, their biggest daily percentage rise in more than a month, after the Fed said it would be a long road to recovery from the coronavirus-induced slump.

“We are seeing some profit-taking… But, gold has gotten through the $1,725 level, which suggests that we are in a pretty bullish format right now,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

“The underlying commitment with the Fed signalling their targets and rates are going to remain on hold through 2022 is quite positive for the gold market.”

The U.S. central bank repeated its promise of continued extraordinary support, and also flagged the need to keep the key interest rate near zero through at least 2022.

Fed policymakers signalled the impact of the COVID-19 pandemic would echo through the economy for years to come rather than be quickly reversed as commerce reopens.

Large stimulus measures and low interest rates tend to support gold, which is often considered a hedge against inflation and currency debasement.

Among other metals, silver declined 2% to $17.88 per ounce, after rising 3.8% in the last session.

Palladium fell 1% to $1,928.44 per ounce and platinum dipped 0.2% to $831.04.

(Reporting by Harshith Aranya and Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)

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