Reuters reported that gold edged lower as the dollar remained under pressure on prospects the Federal Reserve will announce a modest reduction in its bond-buying stimulus at its two day meeting.
The Fed's Open Market Committee, which begins its meeting is widely expected to announce it will begin curbing its USD 85 billion monthly bond purchases by USD 10 billion a smaller reduction than previously anticipated.
Spot gold shed USD 3 to trade near USD 1,311 an ounce, after falling 1 percent in the previous session to a five week low of USD 1,303.85. Gold has lost 21% this year after the Fed signaled it would start reining in QE, which would reduce financial liquidity in the market and eventually lead to an increase in interest rates.
Bullion softened further after data showed US consumer prices barely rose in August. The stable environment for prices may allow the Fed to start trimming its bond purchases, which would extend gold's woes.
