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Gold rose to a two-week high on Friday as the Federal Reserve's decision to leave US interest rates unchanged weighed on the dollar and added to uncertainty over the timing of the first rate hike in a decade.
Spot gold was up 0.5 per cent at $1,136.06 an ounce at 0946 GMT, having earlier touched $1,138.80, keeping it on track to snap a three-week losing streak.
"The Fed statement had a clear dovish tone and this weighed on the US dollar and supported precious metals," ABN Amro analyst Georgette Boele said.
"In the near term that may continue. But we expect the upside to be limited ... as long as the Fed does not communicate that there will be no hikes for the time being, the tightening cycle continues to hang over the market."
The Fed kept interest rates unchanged on Thursday in a bow to worries about the global economy, financial market volatility and sluggish inflation at home. It left open the possibility of modest rate rises later this year.
Gold has benefited in recent years from ultra-low rates, which cut the opportunity cost of holding the non-yielding asset while weighing on the dollar, in which the metal is priced.
Concerns over slowing economic growth in China, mixed economic data and volatility in financial markets have increased doubts about the timing of any US rate increase, which had been expected as early as this month.
The dollar slumped to a three-week low against a basket of major currencies, while European shares came under pressure from the Fed's downbeat comments on the state of the economy.
The Fed also forecast that inflation would creep only slowly toward its 2 per cent target, which could be seen as a negative for gold, often bought as an inflation-hedge.
A majority of Wall Street's top banks now expect the Fed to begin increasing rates in December, according to a Reuters poll conducted on Thursday.
On the physical side, gold discounts in India, the world's second-biggest consumer, widened this week as dealers struggled to offload stocks amid sluggish demand.
Chinese premiums held steady at $5-$6 despite the overnight jump in prices.
Silver rose 0.7 per cent to $15.22 an ounce.
The longer-term outlook for the metal remains bearish, Julius Baer analyst Carsten Menke said in a note, due to its dependence on gold's movements and investment demand.
Platinum fell 0.2 per cent to $978.99 and palladium was unchanged at $607.90.
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