Prices temporarily exceeded the psychologically important $1,700 per oz mark before midday, but quickly returned to the red.

Spot gold was down 0.10 percent at $1,697.41 an ounce by 12.22 p.m. EST (1622 GMT). It had hit an intraday high of $1,705.36 earlier in the session.

Bullion had firmly recaptured its premium against platinum, which was up 0.35 percent at $1,694 per oz. The industrial metal had risen above gold earlier in the day for the first time in six months.

The Fed is expected to issue its policy statement at about 2:15 p.m. EDT (1815 GMT), with investors keenly awaiting hints on a multi-billion dollar economic stimulus program.

Broader commodity markets were higher, with Brent and US crude oil futures rallying in the wake of upbeat economic data from Germany and the United States, bolstering the outlook for oil demand.