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Gold prices eased on Thursday, as the non-yielding metal's appeal was dented by the U.S. Federal Reserve's biggest interest rate hike since 1994 to tame inflation, with other central banks likely to follow suit.

Spot gold slipped 0.2% to $1,830.40 per ounce by 1310 GMT. U.S. gold futures rose 0.6% to $1,830.60.

Gold erased small gains earlier in the session driven by a slight dip in the dollar index, which was still near recent two-decade highs. [USD/]

"The current higher interest rate environment has put a damper on gold demand despite the real inflation threat," said Vincent Tie, sales manager at dealer Silver Bullion.

Bullion was hemmed into a range after Wednesday's bounce, which was spurred by a retreat in the dollar and yields after the Federal Reserve's rate increase.

While gold is considered an inflation hedge, higher rates and bond yields increase the opportunity cost of holding non-yielding bullion.

"It's a real head-scratcher for traders at the moment to work out what exactly will drive gold out of this range," said Michael McCarthy, chief strategy officer at Tiger Brokers, in Australia.

Analysts say gold's moves lately have been influenced by the dollar and rate hike projections, rather than safe-haven flows, with bullion also moving in tandem with equity markets on occasion. [MKTS/GLOB]

Global stocks fell as sentiment was hit by the Swiss National Bank raising its policy rate for the first time in 15 years with a surprise 50 basis point hike.

Gold's safe-haven demand could fade further if the Fed successfully fights inflation without pushing the U.S. into a recession, said Carsten Menke, head of Next Generation Research at Julius Baer.

Elsewhere, platinum rose 0.3% to $942.61 per ounce, while palladium fell 0.4% to $1,852.79.

Silver shed 0.1% to $21.62.