Prices clawed up from previous three-week lows in quiet dealings in which market participants were reluctant to add to positions ahead of the Fed announcement.
"We are all waiting for one important event at 2:15 today," said Graham Leighton, vice president of precious and base metals at Society Generale.
"A 25-basis-point increase has been fully discounted into the market the question is what statement is he (Alan Greenspan) going to make and that's what we're all waiting for," Leighton added.
"We don't expect much of a change" from the Fed's measured approach to tightening, he said.
Although markets widely expect to see a quarter-point rate increase to 2.5 percent, players are also interested in the language accompanying the decision for clues about how the central bank will proceed for the year.
Analysts and traders said gold is caught in a technical trading band between about $420 and $430, with the market awaiting more inspiration from near-term currency moves.
A weaker dollar would tend to rise the buying power of non-US investors in gold and other dollar-denominated metals.
The euro was steady at $1.3030, compared to around $1.3017 late on Tuesday.
Players also were waiting for US President George W. Bush's State of the Union address on Wednesday night for signals on how to tackle the nation's ballooning deficits, which could affect currency rates.
Also due this week are US jobs data on Friday and a weekend meeting of Group of Seven policymakers. Gold specialists GFMS said investment interest drove the gold market higher in the final quarter of 2004, offsetting rising official sector sales.
It also saw a stronger correlation between gold and both the yen and euro rates during the fourth quarter than in the previous quarter, which it viewed, as a good indicator of investment interest.
Other forms of investment, like exchange-traded funds (EFTA's), were seen. One fund, streetcar's, was launched during the quarter, amassing holdings of over 100 tonnes of gold.
GFMS also noted a surge in end-year central bank selling, pegging net fourth quarter sales at 234 tonnes, versus 65 tonnes in the third quarter.
Spot gold was last quoted at $421.00/1.80 which was not far above on Tuesday's New York close at $420.80/1.60. The afternoon fix in London was $421.60. Comex March silver rose 2.0 cents to $6.75 an ounce, dealing from $6.72 to $6.82.
Spot touched $6.72/75 versus $6.70/73 at yesterday's New York close.
The fix was at $6.73. Nymex April platinum fell $5.60 to $873.30 an ounce. Spot platinum stood at $869/873.
March palladium slid $3.40 to $188 an ounce. Spot fetched $185/190.