Gold edged lower ahead of a finely balanced interest-rate decision by the Federal Reserve due later Wednesday. Traders assessed prospects for a Fed rate hike as the central bank weighed persistent inflation against signs of economic slowing. The precious metal slipped as markets priced in the possibility of higher borrowing costs, which typically reduce the appeal of non-yielding bullion.

The Federal Reserve's policy announcement comes after a series of aggressive rate increases over the past year. Investors are parsing every signal for clues on whether the tightening cycle has peaked or if further hikes remain on the table. Gold's decline reflects the opportunity cost of holding the asset when yields on interest-bearing alternatives rise.

Market participants are also monitoring U.S. Treasury yields and the dollar index, both of which influence gold's trajectory. A stronger dollar makes gold more expensive for overseas buyers, while higher yields increase the opportunity cost. The outcome of Wednesday's decision will likely set the tone for gold's near-term direction.