Gold prices gained in volatile trade overnight, nearing the last session’s record peak at one point, after the US Federal Reserve vowed to keep interest rates near zero as the rapid rise in coronavirus cases dampens hopes for an economic recovery.

Spot gold was up 0.5 per cent at $US1,969.16 per ounce by 2020 GMT, while US gold futures settled 0.5 per cent higher at $US1,953.4.

During Fed Chair Jerome Powell’s press conference following the close of the US central bank’s two-day policy meeting, gold jumped as much as 1.1 per cent to $US1,980.31 an ounce, just below the record high of $US1,980.57 scaled on Tuesday, but pared gains soon after.

“The gold price action around the Powell presser – up, down sharply, recovering – when the chair was careful and neutral, suggests a developing plurality of viewpoints at current levels in the market,” said Tai Wong, head of base and precious metals derivatives trading at BMO. “That, after a long rally, indicates a higher probability of a short-term correction.”

The current economic downturn is severe and continued fiscal and monetary support will be necessary for a recovery, Powell said, following the release of the US central bank’s latest policy statement.

Fed policymakers said they remain committed to using their “full range of tools” to support the economy and keeping interest rates near zero for as long as it takes for the economy to recover.

Massive stimulus packages to aid economies around the world reeling from pandemic-driven woes and a low interest rate environment have helped drive gold prices up nearly 30 per cent so far this year.

“The fundamentals for gold have never been better,” said Jeffrey Sica, founder of Circle Squared Alternative Investments. But, he said, gold is going to face resistance near the $US2,000 level.

“You’ve a lot of people trading gold short-term now, so we are going to get some pullback just on what I would consider simple profit-taking since it’s had such an incredible run year-to-date,” Sica said.

In other metals, silver dropped 1.5 per cent to $US24.19 per ounce, platinum fell 1.6 per cent to $US932.69, and palladium slid 5.9 per cent to $US2,148.78.