By Eileen Soreng
BENGALURU (Reuters) - Gold prices inched lower on Thursday on the back of a stronger dollar as investors digested the U.S. midterm election results and turned their focus to the Federal Reserve's monetary policy decision due later in the day.
The Fed is not expected to raise interest rates until its next gathering in December, however market participants are waiting to see whether it offers clues about possible rate increases in December and in 2019.
Higher U.S. interest rates tend to boost the dollar and also push up bond yields, reducing the appeal of non-yielding bullion.
"Gold has found support around $1,223. If we see good news from the Fed, we may see a bounce. But for now, we think the Fed will continue with the monetary policy tightening," said Benjamin Lu, a commodities analyst with Phillip Futures.
Spot gold was down 0.2 percent at $1,223.70 per ounce, as of 0410 GMT, while U.S. gold futures fell 0.3 percent to $1,224.7 per ounce.
The dollar index, which measures the greenback against a basket of six major currencies, traded in a narrow range and was last up 0.2 percent, having touched a more than two-week low in the previous session.
"I suspect gold will ping pong along with the U.S. dollar as traders begin to re-evaluate the current state of the USD," Stephen Innes, APAC trading head at OANDA in Singapore, said in a note.
Meanwhile, Asian stocks rose to a one-month peak following a post-election rally on Wall Street.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.19 percent to 755.23 tonnes on Wednesday, marking the fourth straight session on declines.
Spot gold still targets $1,211, said Reuters technical analyst Wang Tao.
In other precious metals, silver was down 0.2 percent at $14.54 per ounce.
Palladium fell 0.3 percent to $1,130.60 per ounce, after touching a two-week high of $1,139.50 an ounce in the previous session.
Platinum was 0.7 percent lower at $866.85 an ounce, after hitting its highest since June 25 at $877.50 an ounce on Wednesday.
(Reporting by Eileen Soreng in Bengaluru; editing by Richard Pullin and Subhranshu Sahu)