The Federal Open Market Committee on Wednesday left interest rates unchanged at 5.25%. It reiterated that "some inflation risks remain" but at the same time dropped a phrase from previous statements about the "additional firming that may be needed."

The change was interpreted by some as signaling that the Fed is moving closer to cutting interest rates later this year.

And "the prospect of lower interest rates in the U.S. does bode extremely well for gold," said James Moore, metals analyst at TheBullionDesk.com, in a note to clients.

Gold for April delivery rose $4.20 to close at $664.20 an ounce on the New York Mercantile Exchange after a high of $667.30. It's at levels not seen since March 1, after rising $21.70, or 3.4%, over the course of six trading sessions.

May silver closed up 16 cents at $13.48 an ounce, after peaking at $13.57 – also the contract's strongest levels since March 1.

Oil rallied "after some particularly bullish data points yesterday on supplies into the U.S. economy and the general market belief that sooner or later the dollar has to start weakening," Neal Ryan, director of economic research at Blanchard & Co., said in e-mailed commentary.

Data from the Energy Department on Wednesday showed U.S. supplies of distillates and gasoline shrinking as the key driving season approaches, outweighing a bigger-than-expected build in crude inventories.

Meanwhile, the dollar rose against other major currencies Thursday – coming off a two-year low it touched overnight.

The dollar bounced back after "a bit of an oversell post Fed inaction," said Jon Nadler, a metals analyst at Kitco.com, in e-mailed comments.

Gold futures had gained a dollar Wednesday, then climbed further in electronic trading after Fed policymakers left interest rates unchanged for the sixth time in a row.

Against that backdrop, gold breached the technically important $661-an-ounce level and is now potentially in a good position to target $700, coinciding with energy prices headed toward their peak demand period, Moore said.

And "we add to this the next 30 days demand from India as the religious festivals add to the demand for gold alongside the next burst of marriage demand, where gold is traditionally given as a dowry to the marriage by the bride," Julian Phillips, an analyst at GoldForecaster.com, said in e-mailed comments.

But Nadler warns that he sees "a noticeable stall in the action."

"All in all, $660 remains comfortable and $675/$680 still presents a barrier," he said. "If anything really helped today it would have to be energy."

Other metals prices followed gold higher. June palladium rose $5.75 to close at $357.75 an ounce and April platinum gained $11 to end at $1,241 an ounce.

May copper was the biggest gainer, up 1.8%, or 5.4 cents, to close at $3.073 a pound. The contract had climbed as high as $3.095, its strongest level since Dec. 14.

"Overall, the bullish aftermath of the FOMC statement does seem to be providing a bullish platform for the base metals," said William Adams, analyst at BaseMetals.com, in a note to clients.

On the supply side, gold warehouse stocks were unchanged at 7.55 million troy ounces and copper supplies rose by 212 short tons to stand at 35,770 short tons as of late Tuesday, according to Nymex data. Silver supplies rose 1.9 million troy ounces to hit 122.08 million troy ounces as of late Wednesday.