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Bullion rose to record high of $2,599.92 on Wednesday

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Silver gains over 3%

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UBS: greater gold ETF demand to gather pace in coming

months

(Updates as of 1549 GMT)

By Anushree Mukherjee

Sept 19 (Reuters) - Gold prices rose over 1% on Thursday

as the U.S. Federal Reserve launched its monetary easing cycle

with a half percentage point move, boosting bullion to all-time

highs just a few cents shy of the key $2,600 ceiling in the

previous session.

Spot gold rose 1.1% to $2,586.99 per ounce by

11:49 a.m. ET (1549 GMT) and U.S. gold futures gained

0.5% to $2,612.50.

Spot prices scaled a record high of $2,599.92 on Wednesday

after the Fed lowered its window for the benchmark policy rate

by 50 basis points to 4.75-5%, a move that aligned with trader

expectations prior to the decision.

Fed policymakers also projected the benchmark interest rate

would fall by another half of a percentage point by the end of

this year, a full percentage point next year, and half of a

percentage point in 2026.

"The market is factoring in bigger and more rate cuts

because we have both fiscal and trade deficits, and that's going

to further weaken the overall value of the dollar," said Alex

Ebkarian, chief operating officer at Allegiance Gold.

"If you combine geopolitical risk with the current deficit

that we have, along with the low yielding environment and weaker

dollar, the combination of all these is what's leading to gold."

Monetary policy easing by global banks along with robust

central bank buying and geopolitical concerns have fuelled a

rally in gold prices to record highs multiple times this year.

Bullion is considered a safe asset during political and

economic uncertainty. It also tends to thrive in a low-rate

environment.

"This rally could go further, in our view. We target

$2,700/oz by mid-2025. Alongside the near-term risk drivers, we

anticipate greater gold ETF demand to gather pace in the coming

months," UBS said in a note.

Elsewhere, spot silver rose 3.3% to $31.06 per

ounce after hitting its highest level since July in the previous

session.

"We maintain our view that silver is set to benefit from a

rising gold price environment," UBS added.

Platinum rose 2.4% to $991.95 and palladium

gained 3% to $1,094.11.