Gold flat as traders strap in for Fed decision

Gold prices were flat on Wednesday, with investors readying themselves for the US Federal Reserve's rate-hike decision later in the day.

Fundamentals

Spot gold was little changed at $1,809.35 per ounce, as of 0046 GMT. US gold futures were down 0.2% at $1,821.10.

Bullion prices hit a more than five-month high on Tuesday after a smaller-than-expected rise in U.S. consumer prices buoyed bets for a slowdown in rate hikes from the Fed.

US consumer prices barely rose in November amid declines in the cost of gasoline and used cars, leading to the smallest annual increase in inflation in nearly a year.

The market's focus now shifts to Fed's rate hike decision, which is scheduled to be announced at 1900 GMT.

The US central bank is widely expected to increase rates by 50 basis points at its final meeting of the year.

The Bank of England warned about "significant pressure" on households and businesses due to higher inflation and borrowing costs, but said they were more resilient than before the global financial crisis.

Gold is traditionally known as a hedge against inflation but rising interest rates tend to dim the bullion's appeal as it increases the opportunity cost of holding the non-yielding asset.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.3% to 912.72 tonnes on Tuesday.

Spot silver fell 0.3% to $23.65, platinum lost 0.2% to $1,031.13 and palladium was down 0.2% to $1,925.20.