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 fell 0.1% to $1,961.73 per ounce by 0923 GMT, holding in a $13 range. U.S. gold futures were down 0.2% to $1,977.70.

"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 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%, 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.

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

Pockets of weakness, combined with resilient labour market figures and stubborn inflation, "don't help gold one way or another," Craig Erlam, senior markets analyst at OANDA said.

Additionally, 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 fell 0.4% to $23.48 per ounce, platinum was up nearly 1% at $1,041.45 while palladium rose 0.3% to $1,417.92.

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