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2021.01.2809:54:00UTC+00Gold Prices Ease Amid Dollar Strength

Gold prices eased on Thursday and the dollar marched higher after the U.S. Federal Reserve left its benchmark interest rate unchanged, as widely expected, and pledged to keep buying Treasury and mortgage bonds to restrain longer-term borrowing rates and support the economy.

Spot gold dropped 0.2 percent to $1,841.07 an ounce, while U.S. gold futures were down 0.3 percent at $1,838.10.

The Fed reiterated that it would keep its low interest rate policies in place even well after the economy has sustained a recovery from the viral pandemic.

Warning about the risks to the economic outlook, Fed officials removed a phrase from their previous statement that had said the risks were "over the medium term."

The risks are in the near term and there is good evidence to support a stronger economy in the second half this year, Fed Chair Jerome Powell told reporters.

The dollar is also benefiting from a stock market rout triggered by concerns about a short-squeeze among hedge funds, worries about corporate earnings, and delays in coronavirus vaccinations.

The euro nursed losses after a European Central Bank member warned that interest rate cuts are possible to curb the common currency's recent gains.

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