Gold prices climbed to a record high on Thursday, as the US dollar and bond yields ticked lower after the Federal Reserve maintained its projection of three rate cuts for this year.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Spot gold was up 0.8 per cent at $2,203.84 per ounce, as of 0153 GMT, after hitting an all-time high of $2,222.39 earlier in the session. US gold futures jumped 2.1 per cent to $2,206.30.

The Fed held interest rates steady on Wednesday, but policymakers indicated they still expected to reduce them by three quarters of a percentage point by the end of 2024.

Fed Chair Jerome Powell said recent high inflation rate readings had not changed the underlying "story" of slowly easing price pressures in the United States.

"It's the goldilocks scenario for gold prices, where marginally higher inflation expectations meet lower nominal rates to create decreased real yields," said Kyle Rodda, a financial market analyst at Capital.com.

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"There was a period of sluggish sentiment in the market when net longs fell notably. However, a dovish Fed, a little squeeze on existing shorts, and a touch of momentum chasing have boosted bullishness."

Fed funds futures traders are now pricing in a 75 per cent probability that the Fed will begin cutting rates in June, up from 59% on Tuesday, according to the CME Group's FedWatch Tool.

The dollar slipped to a one-week low against its rivals, while benchmark US 10-year Treasury yields also dipped.

"With Powell keeping three potential rate cuts in play this year, bond yields and the USD dipped, which opened a pathway higher for the gold price," Tim Waterer, chief market analyst at KCM Trade, said in a note.

Spot silver gained 0.4 per cent to $25.70 per ounce, platinum rose 0.8% to $914.25 and palladium climbed 1.2 per cent to $1,034.

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