Wednesday saw a modest decline in gold prices as recent surge in inflation has stoked concerns about a possible hawkish outcome, which led traders to steer clear of large wagers ahead of the Federal Reserve's interest rate decision later in the day.

Spot gold added 0.1% to $1,930.22 per ounce, meanwhile gold futures slipped by 0.1% to $1,950.95 per ounce.

Gold prices have recently received some bids due to the increased uncertainty before the Fed meeting, helping to keep prices well above $1,900 an ounce. Larger gains, though, were constrained by a higher dollar, which was trading at six-month highs.

At the end of a two-day meeting later on Wednesday, the Fed is largely anticipated to maintain interest rates unchanged.

However, a recent spike in inflation that was mostly caused by rising oil prices may prompt the central bank to adopt a more pessimistic outlook. The Fed has not ruled out raising interest rates at least once more this year, which it may announce later today.

High interest rates increase the opportunity cost of investing in gold, which has been hurt during the past year by a trade.