"Gold has risen to highs of this rally as the FOMC provided a perfunctory yet cordial nod to doves by removing 'risks are balanced' and acknowledging market conditions," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York. "For gold bulls, it is an invitation to push gold higher before the next major hurdle which is the February employment report."
Spot gold was up 0.6 percent at $1,126.70 an ounce at 2:55 p.m. EST (1955 GMT), the highest since Nov. 3, after trading down 0.5 prior to the Fed statement. US gold for February delivery settled down 0.4 percent at $1,115.80 per ounce, before the Fed statement.
Ahead of the Fed's decision to keep rates unchanged for the time being, investors were betting on one quarter-point rate increase in 2016 rather than the four that Fed policymakers signalled in their December economic forecasts. "A potential further decline in equities and market uncertainty about global growth is a good environment for gold because investors want something defensive," ETF Securities analyst Martin Arnold said, prior to the statement.
After a 10 percent drop in 2015, its third year of losses, gold has so far benefited from turmoil in equity markets and worries about an economic slowdown in China, which contributed to lift prices by 6 percent this month. Reflecting rising confidence in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, stood at 21.52 million ounces on Tuesday, the highest since Nov. 5.
Looking at demand in Asia, Helen Lau, analyst at Argonaut Securities, expects China's gold imports to remain strong due to a seasonal demand surge ahead of the Lunar New Year holiday in February. Spot silver turned up 0.3 percent to $14.54 an ounce, platinum rose 0.3 percent to $877.24 and palladium was up 1.5 percent at $499.55.