Gold prices inched lower on Thursday as cautious investors awaited signals on the US Federal Reserve's timeline on withdrawal of its pandemic-era stimulus, with analysts expecting a further slide in prices on a formal announcement.
Bullion is viewed as a hedge against the inflation and currency debasement likely from widespread stimulus. The Fed's tapering could tackle both those conditions, diminishing gold's appeal.
Spot gold was down 0.1% at $1,790.42 per ounce by 0424 GMT, while US gold futures eased 0.1% to $1,791.70.
The Federal Open Market Committee's two-day policy meeting is due on Sept. 21-22, where the US central bank is expected to provide guidance on when it will start withdrawing its asset purchases and on eventual interest rate hike.
"Central banks want to reduce the emergency accommodation, it's not needed anymore ... That's going to be negative for gold over the medium term," Stephen Innes, managing partner at SPI Asset Management said, adding that gold could snap $1,770 next week if the Fed presses on with their taper announcement.
"We will have to start pricing in higher interest rates at some point in the next six months."
Gold slips off $1,800 pivot, investors seek direction from Fed
US factory production data on Wednesday showed that manufacturing was strong in August while New York Fed's "Empire State" index on current business conditions surged in September.
While spot gold hit a one-week high following US consumer price index data, it gave up most of the gains on Wednesday as US Treasury yields ticked higher.
"Perhaps the gold complex is sensing a higher-than-expected taper by the Fed will be announced next week and as a result, funds may not want to get aggressively long heading into the statement," Edward Meir, analyst with ED&F Man Capital Markets said in a note.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2% to 998.46 tonnes on Wednesday.
Elsewhere, silver was unchanged at $23.81 per ounce, while palladium climbed 1.7% to $2,036.33.
Platinum was flat at $947.39, recouping some lost ground after hitting an over nine-month low in the previous session.