Gold futures rallied in electronic trading Wednesday, recovering losses from their decline in the regular session, after the Federal Reserve's announced its decision to cut the main U.S. interest rate by a quarter of a percentage point to 2 percent which boosted demand for the precious metal.
Gold for June delivery rose $14.90 to $880 an ounce in electronic trading on the New York Mercantile Exchange.
Ahead of the Fed announcement, gold futures finished regular trading with a loss of $11.70 to end at $865.10 an ounce.
After a two-day regular meeting, the Fed pushed funds rate down to 2 percent, its lowest level since late 2004, but in line with market expectations. The cut suggest the Fed remains troubled by the economic outlook.
The Fed has slowed the pace of rate cuts as its previous cut was a three quarters of a percentage point cut on March 18.
We did not get the impression that today's statement signaled a pause, albeit expectations now show a 75 percent chance of no cut, come June, said Jon Nadler, senior analyst at Kitco Bullion Dealers.
The Fed refused to close the doors on any policy options as it tries to ensure that the economy is first revived, Nadler said.
In Currency trading, the dollar fell against major counterparts after the Fed decision. The dollar index, which tracks the performance of the greenback, fell 0.5 percent to 72.54.
Crude-oil futures dropped after the Energy Department reported that crude inventories rose 3.8 million barrels to 319.9 million barrels in the week ending April 25.
Also on the Nymex, July silver futures fell 5 cents at $16.59 an ounce and July platinum ended down$4.90 to $1,935.20 an ounce.
June palladium lost $8.90 to $422.75 an ounce while July copper edged up 2 cents to end at $3.90 a pound.