Gold fell to a one-month low as the dollar firmed on Wednesday, after the US Federal Reserve kept interest rates unchanged as expected and the market reduced expectations of a surprise win by France's far-right presidential candidate. The Fed concluded its two-day meeting with a bullish statement that downplayed weak first-quarter economic growth, said inflation has been "running close" to its target, and emphasized the strength of the labor market, in a sign it could tighten monetary policy as early as June.

Spot gold was down 0.8 percent at $1,246.76 an ounce by 2:58 pm EDT (1858 GMT), after falling below the 50-day and 200-day moving averages and touching its lowest since April 5 at $1,244.93. US gold futures settled down 0.7 percent at $1,248.50. "The Fed's apparent comfort with the first-quarter slowdown and its sanguine outlook has pressured gold back to day's lows as the narrative of two more rate hikes this year remains robust," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

"Gold breaking down below the 50- and 200-day moving averages today suggests that further short term losses may be likely." As well as reducing demand for non-interest bearing gold, higher rates would make the dollar-denominated metal more expensive for buyers paying with other currencies. Traders are pricing in a 70 percent chance of a June rate increase, according to the CME Group's FedWatch Tool.

"Attention will now turn to Friday's payrolls to get the ball rolling on that front," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto. In other precious metals, spot silver was on track for its most technically oversold level on the 14-day relative strength index since November 2014. It was down 1.4 percent at $16.567 per ounce, after touching the lowest since January 11 at $16.48. Platinum sank to $896.35, the lowest in 2017, before moderating to trade 2.1 percent lower at $903.25. Palladium slipped 1.9 percent to $799.25.

Copyright Reuters, 2017