Picture used for illustrative purpose. File

Gold rose on Thursday, regaining some lost ground from last session's sell-off, after the US Federal Reserve raised concerns that a recovery from the coronavirus-induced economic slump faced a highly uncertain path, weighing on risk sentiment.

Spot gold was up 0.7% at $1,943.07 per ounce by 0537 GMT, after declining more than 3.5% to a near one-week low on Wednesday. US gold futures fell 1% to $1,950.30.

"Gold is stable after it got hammered overnight. The main fundamentals behind gold have not changed," said Edward Meir, an analyst at ED&F Man Capital Markets.

"Stimulus is still coming in and it's very pre-mature to say we're recovering globally and should see higher rates and stronger dollar; we are many months away from that."

The Fed on Wednesday warned the economic downturn triggered by the COVID-19 pandemic faces a highly uncertain path and reiterated the need for additional fiscal stimulus. The dovish remarks from the Fed on the US economy triggered a retreat in US stocks and across Asian markets. 

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Central banks, including the Fed, have rolled out massive stimulus measures and cut interest rates near zero to combat the economic toll from the virus outbreak, helping gold rise more than 28% so far this year as it's considered a hedge against inflation and currency debasement.

Keeping a check on gold's advance, the dollar index rebounded and US Treasury yields rose after the Fed minutes showed policymakers expressed little support to implement yield curve control to keep cost of borrowing low.

"Gold remains sensitive to movements in the US dollar and US monetary policy expectations. The market proved quite disappointed by last night's Federal Open Market Committee minutes," said IG

Markets analyst Kyle Rodda. Elsewhere, silver rose 1.1% to $27.01 per ounce, platinum climbed 0.3% to $934.71, and palladium gained 0.5% to $2,167.52. 

Reuters