Gold prices continued their upward trend in Asian trade on Friday, following sharp drops in the greenback and Treasury yields due to the Federal Reserve's dovish comments.

Spot gold muted at $2,036.83 per ounce, meanwhile gold futures advanced by 0.3% to $2,050.95 per ounce.

Following the Fed's announcement this week that it will halt interest rate hikes and will explore further rate reduction in 2024, gold recovered from its recent losses. Markets priced in at least three rate tris by the Fed following the Fed's remarks, with the first one possibly occurring as early as March 2024.

The Fed's announcement pushed the greenback to plummet to the lowest in four months, and Treasury rates decreased generally, with the 10-year rate falling below 4%.

The trade increased the value of gold since it raised the potential of reduced interest rates. Since gold produces no returns and is mostly driven by market sentiment and demand for safe havens, lower interest rates also lower the opportunity cost of investment.

The exact timing of the central bank's interest rate reduction was now a subject of market speculation. According to Fed Fund futures prices, there is a more than 70% possibility that the bank would lower interest rates by 25 basis points in March 2024.