KONTAN.CO.ID - SINGAPORE. Gold prices were subdued on Wednesday as investors remained cautious ahead of the Federal Reserve's policy decision, where the U.S. central bank is expected to stay put on interest rates, but prospects loom for further hikes later this year.

Spot gold was down 0.1% at $1,929.86 per ounce by 0517 GMT, holding below its highest level since Sept. 5 reached on Tuesday. U.S. gold futures eased 0.1% to $1,951.10.

The Fed's rate-setting policy committee will release a new policy statement and interest rate decision at 1800 GMT, with Fed Chair Jerome Powell scheduled to hold a press conference at 1830 GMT.

"Thus far, real Treasury yields have remained elevated in the lead-up to the upcoming Fed meeting, which reflects broad positioning in place for a hawkish-pause scenario from the Fed and kept gold prices on some caution," said Yeap Jun Rong, a market strategist at IG.

"The focus ahead will be on whether the fresh economic projections are able to provide the conviction that the Fed's view for additional tightening will be followed through."

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On Tuesday, Treasury Secretary Janet Yellen said U.S. growth needed to slow to a pace more in line with its potential rate to bring inflation back to target levels since the economy was operating at full employment.

Surging oil prices have added to inflationary pressures and raised expectations that the U.S. central bank will keep rates higher for longer.

A more hawkish Fed on the back of stronger-than-expected August U.S. CPI and PPI data released last week should see downside risk to gold prices, NAB Commodities Research said in a note.

Spot gold may retrace into a narrow range of $1,917 to $1,921 per ounce, as it failed to break a resistance zone of $1,933 to $1,935, according to Reuters technical analyst Wang Tao.

Spot silver dropped 0.7% to $23.08 per ounce, platinum fell 0.7% to $932.29 and palladium was steady at $1,259.39.

Editor: Wahyu T.Rahmawati