Gold gave up some of its losses on Wednesday as the dollar pared gains after the US Federal Reserve held interest rates unchanged at its first meeting since President Donald Trump's inauguration. In a statement following its two-day meeting, the Fed painted a relatively upbeat picture of the US economy that suggested it was on track to tighten monetary policy this year, though it gave no firm signal on the timing of its next rate move.
"Gold largely recovered the day's losses after a remarkably bland FOMC statement, which contained no murmurs of upcoming rate hikes or even consideration of balance sheet reduction while providing the barest nod to inflation going back to 2 percent," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
"The three dissenters from 2016 have rotated off and the new, more dovish panel is proceeding cautiously."
Gold is highly exposed to interest rates, particularly in the United States, as higher rates lift the opportunity cost of holding non-yielding assets and boost the dollar, in which gold is priced.
Spot gold was down 0.08 percent at $1,209.58 an ounce by 2:39 p.m. EST (1939 GMT), after touching a session low of $1,197.73.
US gold futures settled down 0.3 percent at $1,208.30 prior to the statement.
The dollar index pared gains and was up 0.1 percent.
"It appears that a March rate hike will hinge on upcoming data releases and any indications of the size of fiscal stimulus," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto.
"Payrolls on Friday will be the next important signpost in terms of data."
Spot silver rose 0.2 percent to $17.56 an ounce, after touching its highest in more than 11 weeks at $17.61.
Platinum inched up 0.08 percent to $995.24, while palladium rose 1 percent to $760.25.