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Gold struggled for momentum on Wednesday as traders refrained from making big bets ahead of the U.S. Federal Reserve's policy decision due later in the day.

Spot gold inched 0.1% lower to $1,963.59 per ounce by 0347 GMT, while U.S. gold futures edged 0.1% higher to $1,965.30.

"Broader markets are looking for an extended rate pause through the rest of the year, while Fed officials could push back by leaving the door open for one more hike in September or November," said Yeap Jun Rong, a market strategist at IG.

While most traders see rates holding in the 5.25%-5.5% range in 2023, 35% see a chance for another 25 basis-point hike in November, according to CME's Fedwatch tool.

Gold is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion.

However, "over the medium term, the yellow metal could still retain its upward trend, given that we are in the final phase of the Fed's tightening cycle," Yeap added.

The dollar and U.S. Treasury yields were close to their two-week highs from Tuesday, weighing on zero-interest-bearing gold. [USD/][US/]

Along with policy guidance from the European Central Bank, traders also await second-quarter U.S. GDP data due on Thursday. The U.S. economy was forecasted to have risen 1.8% during April-June compared to a 2% rise in the first quarter.

Markets will also keep an eye out for the June personal consumption expenditures (PCE) index due on Friday. Core PCE, the Fed's preferred inflation gauge, was estimated to have climbed 0.2% in June compared to a 0.3% rise in May.

Among other metals, spot silver fell 0.3% to $24.62 per ounce, platinum rose 0.2% to $966.75 and palladium was up 0.1% to $1,285.28.