Gold prices stabilised near a two-week low on Wednesday, as investors await the US Federal Reserve's decision on the pace at which the central bank plans to taper its pandemic stimulus measures.

Spot gold was little changed at $1,769.50 per ounce, as of 1219 GMT. US gold futures fell 0.2% to $1,769.60.

"A potential acceleration of tapering from the Fed and a steeper rate curve could sustain some pressure, but as some expectations have been priced in, a more aggressive move than anticipated could move gold lower further," said Xiao Fu, head of commodities markets strategy at Bank of China International.

The Fed is expected to announce that it is speeding up the end of its pandemic-era bond purchases and signal a turn to interest rate increases next year as a guard against surging inflation.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding bullion, which bears no interest.

Compared to an announcement on faster tapering, what will be more interesting, on the other hand, will be to see whether Fed Chair Powell fuels or perhaps dampens rate hike expectations, Commerzbank analysts said in a note.

Gold dips in anticipation of US inflation data

"The response of the gold price will probably be triggered by the EUR-USD exchange rate and by bond yields." The European Central Bank, the Bank of England and the Bank of Japan are also scheduled to meet this week.

The ECB and BoE are unlikely to be too far behind the curve, BOCIL's Fu said, adding that they will take cues from the Fed, as they have been pretty coordinated during the pandemic and have avoided surprises between them, while also factoring in their own situations including the spread of coronavirus.

Silver fell 0.5% to $21.82 per ounce, platinum dropped 0.9% to $911.94, and palladium dipped 1.5% to $1,596.51