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Gold edged lower on Wednesday after upbeat U.S. data supported the view that the world's biggest economy may be strong enough for the Federal Reserve to raise interest rates next week.

Spot gold was down 0.3 percent at $1,166.75 per ounce by 0605 GMT. Gold stayed near 10-month lows touched on Monday, after ending the prior session nearly flat.

"Everyone is waiting for the FOMC meeting next week and the liquidation in exchange traded funds and a firm dollar has put pressure on prices," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"People would be more interested in hearing about whether this would be the hike for now or will there be any subsequent rate hikes," Leung said, forecasting choppy trade going into the year-end holidays.

Several Fed policymakers have expressed confidence in the U.S. economy and signalled a possible near-term interest rate hike.

Investors were also looking at European Central Bank's upcoming policy meeting on its quantitative easing programme.

The ECB is expected to change the terms of its asset-purchase programme to alleviate a bond shortage and extend the purchases beyond March 2017.

“Weak physical demand from India and China is putting further pressure on prices. India’s demonetisation process briefly spurred safe-haven demand, but this was rapidly suppressed by the subsequent liquidity issues,” Pollini said.

“In China, the government’s decision to restrict gold imports in order to prevent capital outflow has also weighed on prices and we are waiting to see how this could hamper the traditional buying period that is due to start soon in China ahead of Lunar New Year.”

Reference: Reuters