Gold prices steadied on Wednesday, but were supported by heightened safe-haven demand amid fresh fears of a financial crisis and monetary policy uncertainty ahead of a Federal Reserve rate decision.

Spot gold traded mute at $2,017.01 per ounce, while gold futures added 0.1% to $2,025.80 per ounce. On Tuesday, both instruments gained 1.7%, their largest intraday gain in nearly a month.

The yellow metal gained dramatically on Tuesday as U.S. bank stocks plunged after JPMorgan Chase & Co's government-brokered buyout of First Republic Bank raised fears that several other regional U.S. lenders were insolvent.

Bullion demand was also boosted by growing fears of a US debt default, when Treasury Secretary Janet Yellen cautioned that the world's largest economy could face a June 1 deadline to satisfy its obligations. The warning came as Republican and Democratic lawmakers sparred over how much to raise the Congressional debt ceiling.

However, the uncertainty surrounding the Fed meeting limited gold's gains. While the Fed is widely expected to raise interest rates, markets are concerned about a possible pause in the Fed's year-long rate hike cycle.