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Gold prices eased on Wednesday from a 1-1/2-month high touched in the previous session, dragged by a slightly stronger dollar, even as investors bet that recent U.S. economic readings make the case for a pause in the Federal Reserve's rate-hike stance.

Spot gold fell 0.1% to $1,976.05 per ounce by 0350 GMT, after hitting its highest since May 24 at $1,984.19 on Tuesday.

U.S. gold futures were little changed at $1,980.00.

The dollar index edged higher from a more than one-year low hit on Tuesday, making gold more expensive for holders of other currencies. [USD/]

U.S. retail sales increased less than expected last month, rising 0.2%, against the 0.5% expected in a Reuters poll of economists.

While a 25 basis-point rate hike at the Fed's July 26 meeting is largely expected, the U.S. central bank is "expected to retain its hawkish tone, which could pose a challenge to gold's upside," said Yeap Jun Rong, a market strategist at IG.

According to 106 economists polled by Reuters, the expected July 26 rate hike to the 5.25%-5.50% range could be the Fed's last increase of the current tightening cycle.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

"Gold prices may have to reclaim the key psychological level of $2,000 to potentially provide more conviction for buyers," said Yeap.

Meanwhile, the rise from Monday's low of $1,945.65 looks too sharp to sustain, and the current correction could extend into a range of $1,961-$1,970, said Reuters technical analyst Wang Tao. [TECH/C]

China said it would formulate plans to stabilise growth in 10 sectors, including auto and steel, as they face difficulties such as insufficient demand and declining revenues. [MKTS/GLOB]

Among other metals, spot silver and platinum both fell 0.1% to $25.06 and $982.22 per ounce, respectively.

Palladium fell nearly 1% to $1,306.97 after rising to its highest since June 26 at $1,325 on Tuesday.