Gold prices stayed strongly supported above $2,000 on Thursday boosted by bets that the US Federal Reserve might pause or slow the pace of rate hikes and its predictions of mild recession this year.

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Spot gold was up 0.6% to $2,026.26 per ounce by 1126 GMT, about $40 off record highs hit in 2020. U.S. gold futures gained 0.8% to $2,040.20.

Gold was supported after data on Wednesday showed the U.S. Consumer Price Index (CPI) rose 0.1% last month, after advancing 0.4% in February, raising hopes that the Fed was nearing the end of a tightening cycle.

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These expectations were reinforced by minutes of the Fed's March meeting that indicated several policymakers considered pausing rate increases and projected that recent banking sector stress would tip the economy into recession.

While traders were nervous about an economic recession and extension of the banking crisis, gold is likely to remain bid, yet is likely to remain prone to profit taking on the highs, said independent analyst Ross Norman.

Safe haven gold tends to gain during times of economic or financial uncertainty, while lower rates also lift its appeal as it does not bear interest. The dollar was close to its lowest since early February, thereby making gold cheaper for holders of other currencies.

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A combination of rising expectations of a dovish Fed pivot, recession fears, and a weaker dollar are lifting gold and could help the precious metal reach a fresh yearly high, said Fiona Cincotta, senior financial markets analyst at City Index said in a note

Gold needs to gain acceptance above $2,020 to test the yearly high of $2,032, while on the downside, immediate support can be seen at $2,000-$2,001, Cincotta added.

Spot silver was up 0.4% to $25.58 per ounce, holding near a one-year high hit in the previous session. Platinum jumped 1.3% to $1,028.36 and palladium was up 0.1% to $1,461.46.

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First Published:Apr 13, 2023 5:37 PM IST