Gold traded in a narrow range on Wednesday as traders refrained from making big bets while positioning for fresh economic data and the U.S. Federal Reserve's interest rate strategy next week.

Spot gold was little changed at $1,962.47 per ounce by 1114 GMT, holding in a $13 range. U.S. gold futures fell 0.1% to $1,979.50.

The dollar inched 0.2% lower, supporting bullion. A stronger dollar makes gold cheaper in foreign currencies.

"Gold is moving in a small range, making it seem like the volatility disappeared. But this compression of the volatility is mostly related to the market being in a wait-and-see mood as the wait for the Fed's rate hike path and for new market drivers," said Carlo Alberto De Casa, external analyst at Kinesis Money.

Bullion was finding support at the $1,940 level and resistance around $1,980, De Casa said.

The U.S. inflation report for May, due on June 13, ahead of the Fed meeting, will provide investors with more clarity about the health of the world's largest economy.

While traders anticipate a nearly 74% chance that the Fed will hold interest rates in the 5%-5.25% range, they see nearly 51% odds of another hike in July, bringing rates in the 5.25%-5.50% range, per the CME FedWatch tool.

The OECD also saw Fed rates peaking soon at 5.25-5.5% and "modest" rate cuts expected in the second half of 2024.

Across the Atlantic, European Central Bank governing council member Klaas Knot said two more 25 bps rate hikes would be needed to tame inflation.

Non-interest-bearing bullion tends to become less attractive in a high interest-rate environment.

Top bullion consumer China held 67.27 million fine troy ounces of gold at the end of May, up from 66.76 million ounces at end-April.

In other metals, silver rose 0.2% to $23.64 per ounce, platinum was up 0.8% to $1,039.99 while palladium rose 0.2% to $1,416.33.

(Reporting by Seher Dareen and Arundhati Sarkar in Bengaluru; editing by Jason Neely and Sharon Singleton)