BENGALURU (Reuters) - Gold prices edged lower on Thursday as investors booked profits after a 1.5 percent rise in the previous session, opting for riskier assets like equities after the U.S. Federal Reserve held interest rates steady at the end of a two-day policy meeting.
The U.S. central bank, however, strongly signalled it could still tighten monetary policy by year-end as the labour market improved further.
Spot gold was down 0.3 percent at $1,332.80 an ounce by 0402 GMT, while U.S. gold futures rose 0.4 percent to $1,336.70 an ounce.
"People are expecting that the Fed is going to raise rates for sure in December. So, they have started to take profits," said Richard Xu, a fund manager at HuaAn Gold, China's top gold exchange-traded fund (ETF).
"The first phase of a gold run, which is largely driven by the Fed's inaction to raise rates, is over. The market is now looking three months ahead and taking positions accordingly."
Still, spot gold may retest a key resistance at $1,338 per ounce, as suggested by its wave pattern and Fibonacci projection analysis, according to Reuters technical analyst Wang Tao.
"The rate environment looks less accommodative even it remains on a more gradual slope, meaning that oversized rallies in gold may not have much room to run," INTL FCStone analyst Edward Meir said in a note.
Ongoing strength in the equities could also hurt gold's prospects, Meir added.
Asian shares surged on Thursday, taking their cue from Wall Street, slugging the dollar and lifting most commodity prices.
"Indications out of the Federal Reserve that a 2016 rate increase is still very much a live possibility may restrict gains to gold above $1,340," said Sam Laughlin, precious metals trader with MKS PAMP Group.
"Initial support for the metal sits toward $1,330 ... while resistance toward $1,340 is keeping a lid on any moves higher."
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.60 percent to 944.39 tonnes on Wednesday.
Among other precious metals, spot silver touched a two-week high of $19.88 an ounce. The metal rose nearly 3 percent in the previous session.
Platinum also was steady at $1,051.90 per ounce. It rose more than 2 percent on Wednesday to touch its highest since early last week at $1,056.60.
Palladium rose 0.2 percent to $684.30. It hit a near two-week high of $694.30 in the prior session.