Gold pared gains after reaching an almost two-week high amid renewed concern that the Federal Reserve will still raise U.S. interest rates, even as policy makers cut their outlook for borrowing costs.

Fed officials dropped a pledge to be “patient” in tightening policy in a statement Wednesday, even as they lowered their projections for rates by the end of the year. The dollar rebounded Thursday, climbing as much as 1.5 percent against 10 major peers, on speculation U.S. borrowing costs will rise as other economies stick with monetary easing.

Higher rates cut gold’s allure because the metal generally offers returns only through prices gains, sending investors to assets with better yield prospects such as bonds. Holdings in exchange-traded funds backed by the metal headed for the third straight weekly loss as investors exited gold in anticipation of an increase for borrowing costs.

Gold for immediate delivery climbed 0.3 percent to settle at $1,171.18 an ounce, according to Bloomberg generic pricing. Earlier, the metal rose to $1,177.96, the highest since March 6.

Source : Bloomberg