Gold holds steady ahead of Fed's rate decision

Oil prices drifted higher, supported by shrinking U.S. crude inventories. O/R

Commerzbank on Tuesday lowered its year-end gold price forecast to $4,500 per troy ounce and said it expects silver to reach $67 per troy ounce by the end of the year.

Spot silver XAG= gained 0.5% to $57.41 per ounce, while platinum XPT= lost 0.9% to $1,590.24 and palladium XPD= fell 1.1% to $1,255.50.

July 29 (Reuters) - Gold prices were steady on Wednesday as investors awaited the U.S. Federal Reserve's policy decision and comments from Fed Chairman Kevin Warsh for clues on inflation and interest rate outlooks.

Spot gold XAU= was little changed at $4,024.54 per ounce by 0448 GMT. U.S. gold futures GCcv1 for August delivery dipped 0.4% to $4,023.30.

"Gold is very much connected to today's FOMC meeting.... The scenario that may see a potential reversal of the recent bearish bias in gold prices will be the Fed turning to a less hawkish rhetoric," said Kelvin Wong, a senior market analyst at OANDA.

The Fed's policy decision is due at 1800 GMT, while Kevin Warsh's comments are scheduled for 1830 GMT.

Market expectations indicate a 68% chance that the central bank will hold rates steady and a 32% probability of a 25 basis points hike, according to the FedWatch tool. Markets are pricing in a 77% chance of an increase in September. FEDWATCH

Meanwhile, the Bank of England and the Bank of Japan are widely expected to keep rates unchanged on Thursday and Friday, respectively, and caution against rising inflation.