· Gold edged lower on Wednesday, pressured by a slightly stronger dollar, but activity was muted ahead of a Federal Reserve policy announcement that couldtrigger a sharp move in prices.
· A clear hint in the announcement at 1800 GMT could knock gold out of the tight range of about $1,290 to $1,305, in which it has been trapped since mid-May.
· Gold prices have tended to fall before recent U.S. interestrate rises, as investors anticipate the change, but rally afterwards.
· "It might be different this time," said Robin Bhar, head of metals research at Societe Generale. "Forward guidance will be crucial ... That will dictate direction in the short term."
· Spot gold was down 0.1 percent at $1,294.70 an ounce at 1030 GMT. U.S. gold futures for August delivery also dipped by 0.1 percent, slipping to $1,298.10.
· Reinforcing the cautious mood were policy announcements expected from the European Central Bank (ECB) on Thursday and Japan's central bank on Friday, which could affect gold prices.
· The ECB is expected to signal a wind-down of its huge bond-buying programme, which could strengthen the euro and boost gold demand in Europe.
· Holdings of gold by exchange-traded funds (ETFs) tracked by Reuters have decreased by 1.4 million ounces, or 2.4 percent, since late May, while bets on higher prices on the Comex exchange remain low after falling last month to the fewest since January 2016.
· Reuters technical analyst Wang Tao said gold had to break from its trading range, which has been gradually tightening, and is likely to drop towards $1,263-$1,278 an ounce.
· Fibonacci technical support was at $1,286, with resistance at $1,301.40, said ScotiaMocatta analysts. Gold is likely to fall unless it moves back above the 200-day moving average around $1,307, they said.
· To the upside, resistance levels might be located at $1,303, $1,307 and $1,318. On the flip side immediate support lies at $1,292 followed by $1,288 and $1,282.
· In other precious metals, silver was up 0.1 percent at $16.88 an ounce after hitting a seven-week high of $16.95 on Tuesday.
· Platinum was flat at $894.20 and palladium dropped 0.7 percent to $1,011.
Reference: Reuters, FXStreet
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