Gold prices tumbled 1% to touch a two-week low on Wednesday, ahead of a crucial Federal Reserve decision that investors fear will result in a faster-than-expected tapering of the central bank's pandemic stimulus measures.

Spot gold fell 1.1% to $1,766.91 per ounce by 9:48 a.m. ET. US gold futures fell 1.1% to $1,769.60 per ounce.

"We may be seeing some pre-FOMC positioning, the fear being that policymakers will be more hawkish than markets anticipate," OANDA analyst Craig Erlam said.

"Fed Chair Jerome Powell will continue to emphasize the view that inflation will correct itself but hang around for a little longer than previously anticipated. He may accept that this may warrant some rate hikes next year if it doesn't ease up but that the view remains its transitory."

Gold edges higher as dollar eases, investors await Fed meet

The Fed policy announcement is due at 1800 GMT. The central bank is likely to begin paring its monthly asset purchases by $15 billion each month, bringing them to an end by mid-2022.

"The crucial question will be: How much will they reduce the monthly bond purchases?" said Quantitative Commodity Research analyst Peter Fertig.

Ultra-loose US monetary policy has helped drive gold sharply higher since the financial crisis of the late 2000s, with low interest rates cutting the opportunity cost of holding non-yielding assets and inflation fears stoking demand for a hedge.

Market participants are also eyeing a Bank of England policy meeting on Thursday after data suggested unemployment is unlikely to rise sharply, bolstering the case for a rate hike.

On the macro front, US private payrolls increased more than expected in October, suggesting the labor market and overall economy were regaining momentum early in the fourth quarter.

Elsewhere, spot silver tumbled 1.8% to $23.09 per ounce. Platinum fell 1.6% to $1,021.46 per ounce and palladium declined 1.3% to $1,984.93 per ounce.