Gold prices extended gains on Thursday to touch their highest in more than nine months, after the Federal Reserve raised interest rates by an expected 25 basis points and Chair Jerome Powell's comments were read as dovish by the market.

Spot gold was up 0.2% at $1,953.76 per ounce, as of 0206 GMT, after hitting its highest since April 2022 earlier in the session. U.S. gold futures rose 1.3% to $1,967.50.

The Fed delivered a quarter-percentage-point rate increase on Wednesday after a year of larger hikes. However, Powell warned of further monetary policy tightening while noting the progress on disinflation, which he said was in its early stages.

"Although Powell said rate hikes might continue, the market expects the Fed not to be drastic anymore, which is supporting gold. However, we will soon see some profit-booking and bullion continues to face resistance at the $1,960 level," said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.

"Going forwards, traders will focus on economic data and Fed officials' comments for further direction."

Gold tends to benefit in a lower interest rate environment, as it reduces the opportunity cost of holding non-yielding bullion.

If there are more signs of a slowdown in the U.S. economy and the Fed continues to lower rates, then investor demand for gold will rise, said Caesar Bryan, a portfolio manager at Gabelli Gold Fund.

Meanwhile, the Bank of England and the European Central Bank are expected to raise rates by 50 bps later in the day.

The dollar index fell 0.2%. A weaker greenback makes dollar-priced bullion more attractive for buyers holding other currencies.

Elsewhere, spot silver gained 1% to $24.22 per ounce, scaling a one-week high.

Platinum rose 0.7% to $1,010.92 and palladium edged up 0.3% to $1,674.03. (Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu)