Gold prices edged up on Wednesday, supported by lower Treasury yields and a slight pullback in the dollar, while investors await the Federal Reserve's policy decision later in the day for guidance on the monetary policy trajectory.

Spot gold was up 0.1% at $3,328.65 per ounce as of 0422 GMT. U.S. gold futures rose 0.1% to $3,326.10.

"There could be a chance that the Fed may start to tilt towards the dovish side of the pendulum, and that is being portrayed on the Treasury yields," OANDA senior market analyst Kelvin Wong said, adding that dollar strength has also eased for now.

The U.S. dollar index (.DXY), opens new tab retreated from a more than one-month high, while benchmark 10-year Treasury yields hovered near a one-month low on Wednesday.

The Fed is widely expected to keep rates steady, despite U.S. President Donald Trump's constant call to lower them. Markets continue to price in a potential rate cut in September.

Gold tends to do well in a low interest rate environment.

If gold prices go above $3,350 by the end of this week, given the upcoming U.S. inflation data and employment reports, it could potentially swing momentum back towards a boost in prices, at least for the short term, Wong said.

Meanwhile, U.S. and Chinese officials on Tuesday agreed to seek an extension of their 90-day tariff truce that expires on August 12, following two days of talks in Stockholm, with U.S. officials saying that it was up to Trump to decide.

The International Monetary Fund slightly raised its global growth forecasts for 2025 and 2026 on Tuesday, citing stronger-than-expected buys ahead of a jump in U.S. tariffs on August 1 and a drop in the effective U.S. tariff rate to 17.3% from 24.4%.

Spot silver held steady at $38.21 per ounce, platinum lost 0.6% at $1,386.73 and palladium rose 0.5% to $1,265.07.

Source: Reuters