Ending a four-day decline, the yellow metal recovered marginally in a cautious trading ahead of the US Federal Reserve policy statement.

The gold prices were under pressure in the absence of any solid buying support as investors were in wait and watch mode. Investors were waiting for indications for possible timing on raising interest rate by the US Fed.

Money managers and hedge funds have been bullish with their continuous bets on gold at Comex for a fifth week in a row. The bullish outlook for gold is highest since February this year, according to data by Commodity Futures Trading Commission. 

A majority of commodity investors and traders preferred to be on the sidelines ahead of the US Federal Reserve's statement. Spot gold rose 0.3 percent and was trading at $1,167.05 an ounce. 

Tracking the overnight decline on Wall Street, Asian stocks eased on Wednesday. The Asian stock exchanges were also slipped into wait and watch mode ahead of the statement from the US Federal Reserve. As a result, the dollar index was steady. 

Recently, the yellow metal was in bear phase owing to surging of the US dollar. After going above the 200-day moving average peaking at $1,187 an ounce, the gold price again slipped below $1,166.

If gold price breaks above this barrier, it would result in positive year-end closing above $1,200, predict analysts. Otherwise, chances are gold price could drop further to $1,000 an ounce by the end of the year. 

Generally, the yellow metal is not linked with dividends or interest rates, but it faces tough competition from high-yield assets in the times of rising rates. The US Fed seems to be concerned with the impact of China's economy slowing down on the US and other parts of the world economy. 

Perhaps this situation may influence the US Fed to keep the interest rate at the current near-zero level.

China has set a GDP growth target at seven percent for 2015, but the recent slump in commodity prices, slowdown in the economy, sluggish financial markets and disappointing numbers from the manufacturing sector are creating more concerns for the global economy. 

Meanwhile, the US Fed Reserve may hike interest rate by this year-end or drag it to next year.

Until a clear picture emerges, gold prices are expected to be range bound.  

A recent report from GoldmanSachs indicates normalization of interest rates and this will impact non-yielding assets to pull gold price down to $1,100 to $1,000 over next three to 12 months period.