Gold prices ticked up on Wednesday as the dollar eased but kept to a tight range as investors eyed next week's U.S. Federal Reserve meeting for confirmation on its interest rate hike trajectory.
Spot gold rose 0.2% to $1,774.88 per ounce by 1316 GMT. U.S. gold futures edged up 0.2% to $1,786.60.
"The key driver for gold just now is market sentiment towards the U.S. dollar and by extension that is looking to gauge both the outlook for rate increases and perhaps some sign that inflation has been tamed," said independent analyst Ross Norman.
"The market seems to have become range-bound with the bias towards the downside despite good seasonal physical off take with support seen at $1,760," Norman said, adding the market was likely to thin out as traders square their books into year-end.
Although gold is traditionally seen as an inflation hedge, higher interest rates dim the appeal of the non-yielding asset.
"Gold in the next few trading sessions has more downside risk than upside, prior to the FOMC meeting," said Michael Langford, director at corporate advisory firm AirGuide.
Fed fund futures are now pricing in a 91% chance of 50-basis point (bps) rate increase in December.
The dollar dipped 0.4% making gold less expensive for overseas buyers.
Apart from the final Fed meeting of 2022 scheduled on Dec. 13-14, traders are also looking towards the November Consumer Price Index (CPI) figures for the U.S. due on Dec. 13.
"It as rather unlikely that gold moves higher from current levels," said Julius Baer analyst Carsten Menke, adding that there is no follow through from investors.
On the physical front, top bullion consumer China held 63.67 million fine troy ounces of gold at the end of November.
Spot silver rose 1% to $22.38 per ounce, platinum was up 0.9% at $997.22.
Palladium climbed 0.6% to $1,858.93.
(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri and Louise Heavens)