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Gold prices traded near record-high levels on Thursday, as U.S. yields and the dollar dipped after the U.S. Federal Reserve hinted it may pause its rate-hike cycle.

Spot gold was up 0.1% at $2,040.46 per ounce by 0249 GMT. Earlier in the session, prices rose to $2,072.19 per ounce and hovered close to an all-time high of $2,072.49 scaled in 2020.

U.S. gold futures rose 0.6% at $2,050.10.

The Fed raised its benchmark overnight interest rate by 25 basis points, but no longer said that it "anticipates" further rates increases would be needed, only that it will watch incoming data to determine if more hikes "may be appropriate."

Gold is helped by "lower yields and a weaker dollar in the aftermath of the recent Fed meet and changes in the policy statement language providing the conviction that the central bank will likely shift towards a rate pause," said Yeap Jun Rong, market analyst at IG.

The dollar index was down 0.2%, making greenback-priced gold more affordable for overseas buyers. Benchmark U.S. Treasury yields also dropped. [USD/] [US/]

There is some profit-taking currently and it will likely continue in near-term, but the outlook for gold remains bullish, said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.

Fed Chair Jerome Powell said the U.S. had a greater chance of avoiding a recession, but would not rule it out and added, "it's possible that we will have what I hope would be a mild recession."

Economic uncertainties and lower rates tend to boost demand for the zero-yielding asset.

Concerns in the banking space remain unresolved, that will put a cautious stance in the risk environment, drawing continued safe-haven flows for gold in the event of further fallouts, Yeap said.

Spot silver rose 0.9% at $25.82 per ounce, platinum gained 1% to $1,060.16 while palladium edged 1.4% higher to $1,443.11.