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Gold prices edged higher on Wednesday as attention turned to the Federal Reserve's upcoming monetary policy decision, with the U.S. central bank anticipated to implement a third rate cut this year and provide insights into its plans for 2025.

Spot gold nudged 0.1% higher to $2,648.43 per ounce by 0237 GMT. U.S. gold futures were flat at $2,663.20.

The U.S. Fed began its two-day policy meeting on Tuesday, with focus on the central bank's updated economic projections and the dot plot, which could alter expectations for the rate trajectory through 2025 and 2026.

U.S. retail sales increased more than expected in November, adding to warmer inflation readings in recent months and suggesting that the central bank could pause rate reduction in January.

Markets see a 97.1% chance of a quarter-point rate cut but have only priced in a roughly 16.3% chance of another reduction in January, according to CME's FedWatch tool.

"We could be looking at a stronger gold price by the day's close after the Fed's announcement. Market may have priced out too many cuts for next year so if the Fed imply two cuts, that could benefit gold for a pop higher," Matt Simpson, a senior analyst at City Index said.

On the policy front, the Bank of Japan, Bank of England, Riksbank and Norges Bank are expected to deliver their policy verdicts later this week.

Chile's central bank cut its benchmark interest rate by 25 basis points to 5.00% on Tuesday, extending an easing cycle that began last year.

Non-yielding gold tends to do well in a low-interest-rate environment.

Traders are also closely monitoring key U.S. GDP and inflation data set to be released later this week for additional insights.

Spot silver was down 0.2% at $30.46 per ounce, platinum shed 0.1% to $937.72, while palladium gained 0.3% to $937.04.