Gold prices inched down on Wednesday, a day after hitting an over two-month low, as investors awaited a policy decision by the U.S. Federal Reserve and cues on its future interest rate trajectory.
Spot gold ticked 0.1% lower to $1,866.40 per ounce by 1120 GMT. U.S. gold futures fell 0.2% to $1,866.50.
"Gold is in a wait and see mode," Commerzbank analyst Daniel Briesemann said. "More important is what Powell is saying regarding the future prospects... If he sounds very hawkish gold price could come under further pressure and the dollar could appreciate further."
The dollar index pulled further away from 20-year highs on Wednesday, while benchmark 10-year Treasury yields held close to multi-year highs.
The Fed is set to release a policy statement at 1800 GMT, followed by Chair Jerome Powell's news conference.
The central bank is expected to raise its benchmark overnight interest rate by half a percentage point to help tame inflation, following a quarter-percentage-point rate increase in March, and announce plans for reducing its nearly $9 trillion in assets.
While gold is perceived as an inflation hedge, higher U.S. interest rates and bond yields lift the opportunity cost of holding zero-yield bullion, while boosting the dollar in which the precious metal is priced.
Meanwhile, a fourth consecutive rate hike by the Bank of England is expected on Thursday.
"By now, investors have priced in the financial risks posed by the (Russia-Ukraine) conflict and have reduced some of the fear-based trading as a result," Rupert Rowling, market analyst at Kinesis Money, said in a note.
"For now, gold is left scrabbling for the next support to stave off further drops rather than any hope of it regaining the $1,900 threshold in the short-term."
Spot silver fell 0.2% to $22.52 per ounce, platinum gained 1.3% to $974.75 and palladium was 0.8% higher at $2,272.56.