Mubasher: Gold prices on Thursday hovered near the highest level in eight months reached in the previous session, as the US dollar softened after the Federal Reserve put its monetary tightening cycle on hold.

By 9:10 am GMT, spot gold went up 0.05% to $1,320.52 per ounce, after reaching in the earlier session to $1,323.34 per ounce, the highest level seen since 11 May, while US gold futures climbed 0.72% to $1,325 per ounce.

The US Federal Reserve left its interest rates at their current level on Wednesday, but it said it would be patient in raising borrowing costs this year, citing mounting anxieties about the economic outlook.

“The Fed dropped a commitment to gradual rate hikes from its policy statement [...] US dollar’s plunge alongside treasury bond yields have burnished the relative appeal of gold,” DailyFx senior currency strategist Ilya Spivak told Thomson Reuters.

The US dollar index, which traces the greenback against a basket of six major rivals, ticked down 0.01% to 95.3310.

The yellow metal tends to gain on prospects of lower borrowing costs, which reduce the opportunity cost of holding non-yielding bullion.

Focus turned to the high-profile trade talks between the US and China that kicked off on Wednesday, aiming to resolve their conflict.

The US administration’s criminal charges against Chinese company Huawei and its CFO drove investors to worry about the fate of the trade talks between Washington and Beijing.

Should both sides reach no agreement soon, the US threatened to more than double duties on Chinese imports on 2 March.

“Gold is getting a double whammy from a dovish Fed and US-China trade talks,” OANDA senior market analyst Jeffrey Halley told Reuters, adding that prices would stand around the levels of $1,300 per ounce.

However, “$1,350 is going to be tough to crack and one needs more risks in the market to push gold higher,” Halley said.