Gold prices were flat on Wednesday as investors awaited the U.S. May inflation report later in the day and the Federal Reserve's policy announcement for insight into how soon it will cut interest rates.

Spot gold was almost unchanged at $2,311.68 per ounce, as of 0740 GMT. U.S. gold futures edged up 0.1% at $2,328.30.

"Gold prices have been treading lightly amid the waiting game for greater cues on the Fed's policy path. Any lean towards two rate cuts could be perceived as a more dovish take, which may see gold prices head higher," said IG market strategist Yeap Jun Rong.

Investors will assess the inflation situation when U.S. consumer price index numbers are released at 1230 GMT, just before the Fed concludes its two-day policy meeting.

The market is divided on whether the Fed would cut rates once or twice this year after a strong U.S. labour report, so the attention will be on policymakers' updated economic projections and Chair Jerome Powell's press conference.

Strong U.S. jobs data and reports of China's central bank holding off gold purchases triggered bullion's biggest daily drop since November 2020 last week.

"While China did take a break from gold in May, I don't believe that the People's Bank of China are finished with their diversification efforts away from the U.S. dollar," Tim Waterer, chief market analyst at KCM Trade, said in a note.

"So it may just be a case that they will be more of a 'selective buyer' of gold moving forward."

Demand for gold in Asia is surging despite prices hovering near the record highs it hit in May, industry officials said.

Spot silver rose 0.2% to $29.32 per ounce, platinum was up 0.3% at $954.36 and palladium gained 0.7% to $889.75.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Eileen Soreng and Varun H K)