LONDON: Gold inched up on Wednesday helped by a fall in the dollar, but caution over the Federal Reserve’s policy tightening plan kept bullion prices range-bound.

Spot gold rose 0.2% to $1,720.57 per ounce by 1100 GMT. US gold futures were little changed at $1,719.60.

The dollar eased, increasing gold’s appeal among buyers holding other currencies.

The US central bank is expected to raise interest rates by another 75 basis points (bps) at the conclusion of its two-day policy meeting later on Wednesday.

More than the rate hike, the focus is on the guidance from Fed chairman Jerome Powell, and gold is likely to retest lows in the absence of a dovish pivot, said Michael Hewson, chief market analyst at CMC Markets UK.

Although considered a hedge against inflation, higher interest rates to tame the rising prices increase the opportunity cost of holding non-yielding bullion.

“Everyone now wants to know what other tools the Fed is going to use to support the economy or if it is just going to be focused on bringing down the high inflation,” said Brian Lan, managing director at dealer GoldSilver Central.

Gold has lost more than $300, since climbing past the $2,000-per-ounce level in early March, due to the Fed’s rapid rate hikes and the dollar’s recent rally, overshadowing bullion’s appeal as a safe-haven despite recession risks.

The International Monetary Fund cut global growth forecasts on Tuesday, warning downside risks from inflation and the Ukraine war could push the economy to the brink of recession if left unchecked.

Should the Fed chairman acknowledge the headwinds facing the economy and hint at a pause in its tightening drive, the dollar could weaken and offer support to gold, said Ricardo Evangelista, senior analyst at ActivTrades.

Spot silver rose 0.8% to $18.75 per ounce, platinum added 0.4% to $877.52, while palladium gained 1.1% to $2,031.65.