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Gold Prices Gain as Fed, Cyprus Offer Support (Update 1)

Updated from 1:08 p.m. EDT with settlement prices

NEW YORK (TheStreet) -- Gold prices lifted higher Thursday as a mixture of Federal Reserve support and uncertainty in Cyprus was lending strong technical support to the yellow metal.

Gold for April delivery rose $6.30 to settle at $1,613.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,616.50 and as low as $1,603.60 an ounce, while the spot price was adding $8.60, according to Kitco's gold index.

"The overnight evaluation of the FOMC (Federal Open Market Committee) statement is being treated a little more bullishly than it was than the first knee-jerk analysis," said James Steel, chief commodities analyst at HSBC Bank USA. "You still can't discount the safe-haven impact from Cyprus -- it hasn't gone away yet."

The policy-making wing of the Fed said on Wednesday the U.S. economy had returned to moderate economic growth after a slight lag in the 2013 fourth quarter, and said that the labor market was showing signs of improvement.

The FOMC also released its forecasts, which showed a slight downward revision in real GDP growth to 2.3% to 2.8% in 2013, but it also highlighted the committee's projection that the unemployment rate this year would tick even lower than it had previously expected to 7.3% to 7.5%.

"It's somewhat interesting that they've reduced their growth profile, somewhat, but that they've reduced the unemployment rate as well," Bob Brusca, chief economist of Fact & Opinion Economics, said in an interview. "You have to judge that as them bringing the numbers in line with reality -- there was that sharper-than-expected drop in unemployment."

Gold's continued upward climb on Thursday following the Fed's announcement and Chairman Ben Bernanke's press conference has suggested that markets believe the central bank won't scale back its open-ended monthly purchases of mortgage-backed securities and longer-term Treasuries. Gold investors view quantitative easing as an inflationary concern, which makes the yellow metal a hedge against price increases.

Silver prices for May delivery climbed 40 cents to close at $29.21 an ounce, while the U.S. dollar index was slipping 0.13% to $82.76.

Gold was ignoring downward pressure from the greenback, which was incurring most of its dip from a strengthening Japanese yen. The Japanese currency was surging to ¥94.69 from the prior day's close at ¥96.01. Countering the move in the yen was the euro currency's continued weakening against the U.S. dollar. The euro was sliding to $1.2906 from the previous night's settlement at $1.2936.

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