Gold eased on Wednesday as the dollar steadied on expectations the Federal Reserve is unlikely to deliver significant changes to its policy outlook, though concerns about the global economy might push back the timing of a rate rise.
The Federal Open Market Committee (FOMC) is scheduled to release a statement at the end of a two-day meeting later on Wednesday, and policymakers are likely to restate their "patient" approach to raising rates. A dovish bias could support gold, a non-interest-bearing asset.
Continue Reading Below
The central bank is however also expected to voice faith that the economy will continue to pick up.
"I don't think we can expect a big change in the Fed's policy stance," Citi analyst David Wilson said.
"If there is no greater clarity on interest rates increases or any suggestion that actually a decision is being pushed further into the future, that would be bad for the dollar but not necessarily good for gold."
Spot gold was down 0.1 percent at $1,290.36 an ounce by 1238 GMT, trading in a $8 an ounce range. It hit a five-month high of $1,306.20 last week, before retreating on a stronger risk appetite after the ECB announced its liquidity measures.
U.S. gold futures were down $1.70 at $1,290.00 an ounce.
The dollar rose 0.1 percent against a basket of currencies, having received a slight boost from a surprise monetary easing by Singapore, while European shares dipped.
U.S. data on Tuesday showed durable goods orders unexpectedly fell in December and business investment dropped for a fourth straight month.
With the United States bracing for its first rate hike in nearly a decade, gold prices are forecast to fall for a third year in a row in 2015, a Reuters poll showed.
In the near term, gold is unlikely to fall below $1,250 because of buying interest from the Chinese ahead of the Lunar New Year next month, said Howie Lee, an investment analyst at Phillip Futures.
Gold imports from Hong Kong by top consumer China fell by nearly one third in 2014, although the purchases were still the second highest on record at just over 813 tonnes.
Among other precious metals, spot silver was down 0.1 percent at $18.01 an ounce. Palladium gained 1.1 percent at $787.10 an ounce, while platinum was up 0.1 percent at $1,260.25 an ounce.
(Additional reporting by Manolo Serapio Jr in Singapore; Editing by David Evans and Jason Neely)