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Gold prices held near 10-week highs on Wednesday as investors sought the safety of bullion amid the Ukraine-Russia crisis, with a stronger US dollar weighing on the metal ahead of potential rate hike signals from the US Federal Reserve.

Spot gold was down 0.1% at $1,846.40 per ounce at 1331 GMT after hitting its highest level since Nov. 19 on Tuesday. US gold futures were down 0.3% to $1,846.90.

"Gold's resilience of late is set to be tested by the latest policy signals emanating from the FOMC today," said Extinity analyst Han Tan.

If the Fed tightens policy faster than anticipated to curb inflation, any ensuing surge in Treasury yields could force gold bugs to relinquish recent gains, while a more-hawkish-than-expected Fed could see gold tumbling back towards the low $1,800s, Tan added.

Gold muted as Fed caution counters Ukraine risks

The dollar held close to its strongest level since Jan. 7 ahead of the Fed policy decision due at 1900 GMT.

Interest rate hikes would raise the opportunity cost of holding non-yielding gold, but bullion has remained supported of late on safe-haven demand from the ongoing tensions over Ukraine and market volatility.

US President Joe Biden has said he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine.

The lack of a more sustained breakout in gold can be attributed to two factors: the likelihood of rising interest rates and the psychologically important level of $1,850 an ounce providing substantial resistance, said Carlo Alberto De Casa, market analyst at Kinesis.

Reflecting investor sentiment in the precious metal, holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, jumped to the highest levels in over five-months.

Spot palladium jumped 5.3% to $2,315.80, having hit its highest since Sept. 8. Silver rose 0.4% to $23.91 and platinum jumped 2.7% to $1,053.

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