Gold prices edged lower on Wednesday as the dollar rose after the Bank of Japan overhauled its stimulus programme, with investors turning their focus to the U.S. Federal Reserve's policy outcome on interest rates later in the day.
Spot gold fell 0.3 percent to $1,311.43 an ounce by 0449 GMT. U.S. gold futures fell the same amount to $1,314.50 an ounce.
The Bank of Japan on Wednesday decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus programme.
Both hawkish and dovish comments from Fed officials recently have stoked volatility in financial markets, although consensus is now centred on a U.S. rate hike by year-end, instead of sometime in September.
"There is no realistic chance of a rate hike priced into the market at the moment, so if the Fed hikes interest rates this evening we would definitely see a sell-off in commodities and the emerging markets, including gold," said Jeffrey Halley, senior market analyst at OANDA.
"If the Fed stays pat, we are going see a big rally in commodities. We will definitely see gold and silver moving higher as well."
The dollar index, which measures the greenback against six major currencies, was up 0.2 percent at 96.207 on Wednesday after the BOJ issued its statement.
Fed Chair Janet Yellen is scheduled to conclude the U.S. central bank's meeting with a press conference at 2:00 p.m. ET (1800 GMT) on Wednesday.
Spot gold remains neutral in a range of $1,313-$1,319 per ounce, and only an escape from this zone could give it a direction, according to Reuters technical analyst Wang Tao.
"Gold prices have been consolidating for the past few days. As long as prices remain within $1,300 levels, gold will most likely rally," said Hareesh V, research head at Geofin Comtrade Ltd.
However, "if the Fed raises interest rates, it can drop to $1,245 levels," he cautioned.
Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.41 percent to 938.75 tonnes on Tuesday.
Spot silver was down 0.9 percent at $19.09 an ounce after a small rally in the past couple of sessions.
Platinum was mostly flat at $1,025.40, while palladium dropped 0.6 percent to $676.90.