PRECIOUS-Gold rises 1% after Fed reaffirms dovish stance

* Fed sees U.S. economy growing 6.5% in 2021
* Palladium hits more than 1-year peak

(Recasts; adds comments, updates prices)
By Nakul Iyer
March 17 (Reuters) - Gold prices rose over 1% on Wednesday
after the U.S. Federal Reserve reiterated its accommodative
monetary policy which also weakened the dollar.
Spot gold XAU= rose 0.8% to $1,743.93 per ounce by 1642
EDT, after gaining as much as 1.2%.
U.S. gold futures GCv1 settled 0.2% down at $1,727.10.
The Federal Reserve on Wednesday repeated its pledge to keep
the benchmark overnight interest rate near zero for years to
come. The central bank sees the economy growing 6.5% this year,
the most since 1984, and unemployment falling to 4.5% by year's
end.
"One of the key takeways is the that Fed needs to see
results in terms of economic growth, inflation and employment
before they move to hike rates and not forecasts and that should
support gold in the near-term," said Edward Moya, senior market
analyst at OANDA.
The dollar .DXY fell 0.5%, making greenback-denominated
gold cheaper for other currency holders. USD/
"The one fly in the amber is that the bond market is so far
not that impressed, which could help support the dollar and put
a lid on the gold rally," Tai Wong, a trader at investment bank
BMO in New York said, pointing to elevated U.S. Treasury yields.
Benchmark yields remained high after the Fed projected a
jump in economic growth with no rate hikes through 2023. US/
Gold is seen as a hedge against inflation, but rising
Treasury yields have challenged that status as they translate
into a higher opportunity cost of holding bullion.
Gold is less appealing to investors as yields are being
driven by nominal rates instead of inflation expectations, TD
Securities commodity strategist Daniel Ghali said.
Silver XAG= rose 1.3% to $26.30 an ounce, while platinum
XPT= was steady at $1,211.81.
Palladium XPD= rose 2.8% to $2,568.61, having hit an over
one-year high of $2,578.31 earlier.