The Fed, after wrapping up a two-day meeting on Wednesday, signaled it was on track to increase rates next year but said it was taking a patient stance, allowing gold to keep losses in check.
Higher interest rates would hurt non-interest-bearing bullion, which had been boosted by central bank liquidity and a low interest rate environment in the years following the 2008 financial crisis.
"Right now, the market is struggling to move away from $1,200... the fact that we made a move below $1,189 after the FOMC and no stops were triggered could indicate that there is not a great deal of selling at this stage but at the same time I don't think we have much upside above $1,225," Saxo Bank senior manager Ole Hansen said.
"The market is evenly positioned at the moment and that leaves it open to react to news as it comes heading into January."
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Fed's no-rush stance to withdraw stimulus from the U.S. economy sent European shares up, after Asian stocks enjoyed their best day in 15 months and Wall Street boasted its biggest two-day advance since late 2011.
The dollar rose 0.1 percent versus a basket of leading currencies, while the safe-haven yen fell on expectations of further stimulus next year to bolster Japanese inflation. Benchmark Brent crude oil futures rose almost 2 percent.
Gold is usually seen as a hedge against oil-led inflation.
In India, gold importers are offering a discount of $2 an ounce versus London prices for the first time in almost five months due to excess market supply.
Importers generally charge a premium over London prices but demand in the world's second-biggest gold consumer is expected to fall sharply this month after shipments surged in the past three months.
Among other precious metals, silver rose 0.5 percent to $15.93 an ounce. Platinum was unchanged at $1,197.60 an ounce and palladium lost 0.3 percent at $786.00 an ounce.
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