Despite increasing risk appetite, gold prices gained on Thursday, supported by a declining dollar and Treasury yields following the Federal Reserve's less aggressive than anticipated statement.

Spot gold edged up by 0.2% to $1,986.07 per ounce, meanwhile gold futures advanced by 0.3% to $1,993.70 per ounce.

As was generally anticipated, the central bank kept interest rates unchanged on Wednesday. Markets, however, were pricing in a lower likelihood of any additional rate hikes following remarks made by Fed Chair Jerome Powell, who also noted that financial conditions have tightened significantly in recent months.

The Fed will start reducing rates by the middle of 2024, according to Fed fund futures, which indicated that traders were putting in an 80% possibility of a rate pause in December.

On this idea, the dollar and Treasury yields fell, which helped gold. However, most traders moved their focus to riskier assets like stocks, which limited any significant advances in the yellow metal.

The impending U.S. nonfarm payrolls statistics, which are due on Friday, was suddenly the main focus. Powell reiterated this idea on Wednesday. The Fed is more inclined to raise rates when there are indications of strength in the labor market.