Gold rises as Fed defers rate hikes

BENGALURU, Mar 21 (Reuters): Gold climbed to a three-week peak on Thursday as the US Federal Reserve ruled out chances of any interest rate hike this year, while a surprise cut in US growth forecast added to concerns on global economic slowdown.

Palladium hit a record high on prolonged supply deficit in the market.

Spot gold gained 0.5 per cent to $1,318.36 per ounce as of 0804 GMT, after touching its highest since Feb. 28 at $1,320.22 earlier in the session. US gold futures jumped 1.3 per cent to $1,318.50 an ounce.

Having downgraded the US growth, unemployment and inflation forecasts, the Fed brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year.

"The Fed was even more dovish than expected and that added to concerns that US growth, and therefore global growth, is hitting a patch of weakness," said Kyle Rodda, a market analyst with IG Markets in Melbourne.