London: Gold steadied near $1,230 (Dh4,514) an ounce on Wednesday as investors awaited guidance from the US Federal Reserve, widely expecting it to reaffirm willingness to wait for an extended period before raising interest rates.

The Fed, which wraps up a two-day policy meeting later on Wednesday, is widely expected to end its two-year-old bond-buying stimulus, known as quantitative easing, as the US economy gathers momentum.

Fed officials have also stressed, however, that they are in no hurry to take tightening a step further by raising rates from near zero levels, citing subdued inflation and the poor quality of a recovery in labour markets.

Gold has benefited from the low interest rates and increased liquidity that have dominated central bank policy in the years after the 2008 financial crisis.

Keeping US interest rates lower for a longer period bodes well for a non-interest bearing asset such as gold.

Spot gold was unchanged at $1,228.00 an ounce by 1045 GMT after edging higher on Tuesday. The metal reached a six-week high of $1,245 last week.

US gold futures were down $2.50 an ounce at $1,227.00.

“This should be the end of QE [quantitative easing], but if some wording is used by the Fed that the economic recovery doesn’t justify removal of its monetary stimulus and they have ... to leave the door open to reinstating some measures in the future, then that could be interpreted as fairly positive for gold,” Mitsubishi Corp strategist Jonathan Butler said.

“As long as the economic picture still looks fairly unclear, the Fed will adopt a reasonably cautious stance.” The dollar was unchanged against a basket of leading currencies, having slipped in the previous session after weak economic data, which gives the US central bank reason to hold off from tightening its monetary policy.

Demand for US-made capital goods fell the most in eight months in September, while the housing sector also remained largely soft.

China threat

Weakness in demand from China, the world’s biggest consumer of gold, remains a key threat to any price upside.

“To me the most important thing is that Chinese buyers have been absent for most of this year, and that hasn’t supported the price of gold,” said Victor Thianpiriya, an analyst at Australia and New Zealand Banking Group.

In 2013, China imported a record 1,158.162 tonnes of gold from Hong Kong, the main conduit for gold into the mainland, spurred by a 28 per cent drop in global prices.

But demand has since waned with gold prices largely steady this year.

“Tactically, we still view gold rallies as short-lived and favour approaching gold from the short side. Support is still resilient around $1,180. We expect physical demand to increase in strength on approach of this level,” Standard Bank said in a note.

Elsewhere, Russia increased its gold reserves for a sixth straight month in September, while Azerbaijan added to its holdings for a second month, according to data from the International Monetary Fund.

Among the other precious metals, spot silver was up 0.1 percent at $17.17 an ounce. Platinum was up 0.4 per cent at $1,265.70 an ounce, while palladium rose 0.7 per cent to $795.00 an ounce.