(Reuters) - Gold prices traded in a narrow range on Wednesday, as investors awaited the U.S. Federal Reserve's policy decision later in the day after softer-than-expected inflation data fanned expectation of a moderate interest rate hike path.
Spot gold was little changed at $1,810.99 per ounce, as of 0322 GMT, after hitting a more than five-month high on Tuesday as a smaller-than-expected rise in U.S. consumer prices buoyed bets for a slowdown in rate hikes. U.S. gold futures were down 0.2% at $1,822.40.
Softer U.S. inflation data saw the dollar weakening and gold rallying in the last session, but bullion price action will be quiet currently as the market awaits the Fed decision, said Ajay Kedia, director at Kedia Commodities in Mumbai.
"Gold might hit $1,832 if the Fed sounds dovish. But there is strong resistance at the $1,820 level and prices should trade around this range for the rest of the year."
The U.S. dollar struggled to gain a foothold after a sharp dive overnight.
Market focus now shifts to the Fed's decision scheduled at 1900 GMT. The U.S. central bank is widely expected to increase rates by 50 basis points at its final meeting of this year.
"The Fed would have priced in the latest CPI data and is unlikely to change their interest rate view in the short term," said Michael Langford, director at corporate advisory firm AirGuide.
Gold is traditionally known as a hedge against inflation but rising interest rates tend to dim its appeal as they increase the opportunity cost of holding the non-yielding asset.
Meanwhile, a British law firm said on Tuesday it had brought a case against the world's most important accreditor of gold refineries for renewing a refiner's certification despite alleged human rights abuses at a mine supplying it with gold.
Silver was flat at $23.72, platinum gained 0.4% to $1,036.50 and palladium was up 0.1% to $1,930.88.