Gold prices fell more than 1% on Wednesday, pressured by a firmer dollar and U.S.-China trade talks optimism, while the Federal Reserve held interest rates steady.

Spot gold slipped 1.1% to $3,390.26 an ounce. U.S. gold futures
lost 0.7% to $3,399.1.

The U.S. dollar gained 0.2% against other fiat currencies. A stronger dollar makes gold more expensive for other currency holders.

The Fed held interest rates steady on Wednesday afternoon. The U.S. central bank stuck to comments it had made in the past that it was in no hurry to cut rates, but indicated in a post-meeting statement that it was keeping a close eye on economic volatility.

"Uncertainty about the economic outlook has increased further," the statement said. "The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen."

Market consensus remains that there will be no cuts before July. Higher interest rates tend to pressure bullion as it yields no interest.

Meanwhile, U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's economic tsar He Lifeng in Switzerland this weekend for talks that could be the first step towards resolving a trade war disrupting the global economy.

"China and the United States are formally trying to start a conversation on tariffs, igniting optimism in risk markets," said Bart Melek, head of commodity strategies at TD Securities.

Gold, considered a hedge against geopolitical risks, has risen 29.1% this year.

"While we see limited upside (for gold) near term, we expect prices to push higher again in second half of 2025, potentially hitting $4,000," Bank of America said.

China's central bank added gold to its reserves in April for the sixth straight month, official data showed.

Elsewhere, spot silver
shed about 1.8% to $32.65 an ounce. Platinum slipped 0.3% to $982.15 and palladium shed 0.1% to $973.82.

Source: CNBC