Gold edged lower after the Federal Reserve kept its monetary policy unchanged without promising any more aid, supporting the dollar and putting bullion on course for the worst start to a year in a decade.

The Fed repeated it would maintain bond-buying at US$120 billion per month until “substantial further progress” toward employment and inflation goals has been made. After the central bank’s first meeting of 2021, Chair Jerome Powell said it would take “some time” to achieve the threshold for altering purchases, making clear the central bank’s not close to tapering them.

Bullion has lost about three per cent this month, its worst January performance since 2011, amid gains in the dollar and Treasury yields and as traders weighed prospects for an economic recovery. Powell said that widespread availability of vaccines was grounds for optimism, noting that “several developments point to an improved outlook for later this year.”

“If I look at gold, it seems the market was looking for a more dovish Fed,” said Giovanni Staunovo, an analyst at UBS Group AG. “I still believe we will see a higher price this quarter, supported by low(er) U.S. real rates and a weaker U.S. dollar.”

Spot gold lost 0.3 per cent to US$1,838.22 an ounce by 1:31 p.m. in London, after ending 0.4 per cent lower on Wednesday. Silver was little changed, while palladium and platinum fell. The Bloomberg Dollar Spot Index rose 0.3 per cent, touching a one-month high.