Spot gold turns positive after Fed verdict

AP

Spot gold touched positive territory after the Fed offered signaled that it was on track to raise interest rates sometime next year, saying it would take a ``patient'' approach to raising rates, equating that with phrasing in previous statements about keeping rates near zero for a ``considerable time'' in a show of confidence in the U.S. economy.

Initially flat, spot gold rose 0.2 percent to $1,198 an ounce after the verdict. On Tuesday, the metal hit a session high above $1,221 then a one-week low of $1,188.41 before ending marginally firmer. U.S. gold for February settled 20 cents higher at $1,194.50 an ounce before the announcement.

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Investors were also eyeing Russia after the ruble plunged more than 11 percent against the dollar on Tuesday despite a hefty interest rate hike.

Investors were also eyeing Russia after the ruble plunged more than 11 percent against the dollar on Tuesday despite a hefty interest rate hike by the country's central bank.

Read MoreWhy Russia's monster rate hike spells trouble ahead

Investors will be watching whether the Federal Open Market Committee removes the phrase "considerable time" in the statement it releases at 1900 GMT with regard to the timing of an interest rate increase.

Dropping that phrase would mean the Fed is preparing the market for a rate hike next year as the U.S. economy gathers strength, analysts say, which could weaken the prices of non-interest-bearing assets such as gold.

"The gold market will be closely following what the Fed says. That will dictate the price for the next few days," Natixis analyst Bernard Dahdah said.

"We'll be looking at whether they move into a more data-dependent decision-making process in terms of the speed at which they will take things."

Read MoreFed on track to raise interest rates this summer: Survey

Russia's financial crisis weighed on stock markets, with European shares down 0.5 percent on Wednesday. The Russian rouble remained volatile despite foreign-currency sales by the Finance Ministry.

Barnabas Gan, analyst at OCBC Bank, said the market was watching whether Russia would sell its gold holdings to finance spending. "If that happens, we would see gold taking another step down, possibly closer to our year-end forecast of $1,150," he said.

Demand for physical gold in Asia was lacklustre overnight as traders awaited fresh direction from the Fed, precious metals house MKS said in a note.

Holdings of the world's largest gold-backed exchange-traded fund, which last week posted their biggest weekly rise since mid-July, saw a second consecutive daily outflow on Tuesday, of 1.8 tonnes.

Other precious metals firmed, with spot silver climbing 1 percent to $15.82 an ounce and platinum up 0.7 percent at $1,197.52 an ounce. Palladium was up 0.8 percent at $785.31 an ounce.

Read MoreThe collapse of Russia in 3 charts