*
Gold ascends 2%, before paring some gains
*
Fed hikes rates by 25 basis points
*
Treasury yields drop, dollar hits seven-week low
(Recasts, adds details and analysts' comments, updates prices)
By Bharat Gautam and Seher Dareen
March 22 (Reuters) - Gold prices climbed on Wednesday
after the U.S. Federal Reserve toned down its aggressive
approach to reining in inflation in a widely anticipated policy
statement, and indicated that an end to interest rate hikes was
on the horizon.
Spot gold was up 1.7% at $1,973.52 per ounce by 3:56
p.m. EDT (1956 GMT), after advancing as much as 2%. U.S. gold
futures settled 0.4% higher at $1,949.60 before the Fed
announcement.
The Fed raised interest rates by a quarter of a percentage
point, but indicated it was on the verge of pausing further
increases in borrowing costs amid recent turmoil in financial
markets.
But in the press conference that followed, Fed Chair Jerome
Powell said the central bank was not expecting to cut rates in
2023.
"The Fed is having to balance inflation risks and economic
stability, both are factors that could drive further safe-haven
demand for gold," Standard Chartered analyst Suki Cooper said.
Gold has climbed over 7% so far this month, closing in on
record highs above $2,000 hit in March 2020, on concerns
surrounding the banking and financial industry, mainly triggered
by higher rates.
"While off its intraday highs, gold is 'sticking a fork' in
the Fed's turkey and rallying strongly, betting that this
rate-hike cycle is done," said Tai Wong, an independent metals
trader based in New York.
"The hurdle for another hike is substantial with the Fed
explicitly watching the tightening of financial conditions and
the question though is whether gold can break above last week's
highs with short-term rates at 5%."
Gold is often sought as a safe store of value during
financial instability, and benefits from lower rates as it
yields no interest.
U.S. Treasury yields dropped and the dollar touched its lowest in nearly seven weeks, making precious metals more attractive. Silver gained 2.6% at $22.97 per ounce, platinum added 1.5% at $982.86 and palladium advanced 3.6% to $1,438.45. (Reporting by Seher Dareen and Bharat Govind Gautam in Bengaluru; Editing by Shilpi Majumdar)
8780;))