Gold prices fell on Wednesday as optimism over Sino-US trade talks and hopes of rate cut from central banks hit demand for bullion ahead of the US Federal Reserve's monetary policy decision later in the day. Spot gold fell 0.3% to $1,341.67 per ounce at 0953 GMT. US gold futures slipped 0.4% to $1,345.70 per ounce.
"Donald Trump's tweet that he will meet (Chinese President) Xi Jinping has created speculation in the market that there might be some solution on the trade war," said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers. "That has supported global markets and equities have risen."
"Tonight though there won't be a rate cut (by the Fed), there will be ground work for future rate cuts. Markets are focusing on that too," Trivedi said, adding gold was seeing some profit booking ahead of the event.
All eyes are now on the Fed which is scheduled to release a statement at 1800 GMT, followed by a press conference by Chairman Jerome Powell.
"We urge investors to temper bullish expectations on gold as an improvement in risk appetite from dovish monetary policy will cap gains for the non-interest bearing asset," Phillip Futures said in a note.