Gold prices rose over 1% on Thursday as the U.S. Federal Reserve launched its monetary easing cycle with a half percentage point move, boosting bullion to an all-time high and just a few cents shy of the key $2,600 ceiling in the previous session.

Spot gold rose 1.2% to $2,590.47 per ounce by 2:02 p.m. ET (1802 GMT). U.S. gold futures settled 0.6% higher at $2,614.60.

Spot prices scaled a record high of $2,599.92 on Wednesday after the Fed lowered the benchmark policy rate by 50 basis points to 4.75%-5.00%.

Fed policymakers also projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full percentage point next year, and half of a percentage point in 2026.

"The market is factoring in bigger and more rate cuts because we have both fiscal and trade deficits, and that's going to further weaken the overall value of the dollar," said Alex Ebkarian, chief operating officer at Allegiance Gold.

Bullion is considered a safe asset during political and economic uncertainty. It also tends to thrive in a low-rate environment.

Source : Reuters