Gold extended its decline for a third consecutive on Thursday, weighed by the surge in the U.S. dollar and U.S. bond yields after the Federal Reserve hardened its hawkish posture on interest rates.

Spot gold shed 0.5% to $1,920.10 per ounce by 1149 GMT, having briefly touched its highest since Sept. 1 before closing lower in the previous session.

U.S. gold futures eased 1.3% to $1,940.80.

The Fed held interest rates steady on Wednesday, but its updated quarterly projections showed that rates may be lifted once more this year and kept tight through 2024.

"Gold traders took to heart the Fed's higher-for-longer messaging... forcing bullion bulls to temper their enthusiasm," said Exinity chief market analyst Han Tan.

The dollar climbed over a six-month peak, while benchmark 10-year Treasuries sat atop an 18-year high, weighing on greenback-priced bullion that bears no interest.

But "spot gold has so far only witnessed limited post-FOMC declines, as bullion bulls are apparently clinging on to Fed Chair Powell's words that a US rate cut 'will come' eventually," Tan added.

While markets pencilled in a 45% chance of another rate hike this year, they also bet on roughly a 40% chance that the Fed will ease in the first half of 2024, according to the CME FedWatch tool.

"The precious metal will probably need to rely on some slowing momentum in Treasury yields in order to post gains of any significance to the upside," said KCM Trade Chief Market analyst Tim Waterer.

On investors' radar later in the day will be the Bank of England's policy decision on whether it is halting a run of interest rate hikes that stretches back to December 2021.

Silver fell 0.3% to $23.17 per ounce and platinum slipped 1.2% to $917.48. Palladium dropped 2.1% to $1,247.18, set for its worst session since Aug. 30.

(Reporting by Deep Vakil and Swati Verma in Bengaluru; Editing by Janane Venkatraman and Krishna Chandra Eluri)