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Gold prices traded in a narrow range on Wednesday as investors refrained from making big bets ahead of the U.S. Federal Reserve's interest rate decision and policy outlook later in the day.

Spot gold was little changed at $1,978.39 per ounce, as of 0216 GMT. U.S. gold futures were flat at $1,993.50.

The Fed's rate-setting policy committee will release its policy statement and interest rate decision at 1900 GMT, followed by Chair Jerome Powell's press conference at 1930 GMT.

Traders widely expect the Fed to leave rates unchanged at 5.25%-5.50% this week and are pricing in about a 75% chance of a rate cut in May, according to CME FedWatch Tool.

Investors will be looking out for comments from Powell that could shed more light on the Fed's monetary policy outlook amid expectations of rate cuts in the first half of 2024.

"In November, there was a big dovish shift in market expectation in terms of Fed rate outlook. We saw the dollar and yields drop on that and that helped gold," aid Ilya Spivak, head of global macro at Tastylive. [USD/] [US/]

"However, I think the Fed doesn't want to over endorse a dovish perspective because then inflation expectations may get unhinged."

The U.S. consumer price index (CPI) edged up 0.1% last month after being unchanged in October, the Labor Department's Bureau of Labor Statistics said on Tuesday. In the 12 months through November, the CPI increased 3.1% after rising 3.2% in October.

Gold, which pays no interest, tends to benefit when interest rates fall as this reduces the opportunity cost of holding bullion.

Market participants also awaited the European Central Bank and the Bank of England's policy meetings on Thursday.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.33% to 875.65 tons on Tuesday. [GOL/ETF]

Spot silver eased 0.1% at $22.73 per ounce, while platinum fell 0.1% to $928.27 and palladium skidded 0.3% to $976.42.