Warning of "significant" downside economic risks, the US central bank said it might launch a $400 billion programme to shift its $2. eighty-five trillion balance sheet more heavily towards longer-term debt.
The decision disappointed investors who had envisioned stronger stimulus measures, prompting a slide in stocks as well as commodity prices.
The worries about the euro zone's debt crisis still support the safe haven appeal of gold, but impetus is lacking for bullion to march towards its report high above $1, 900.
"For the short term, gold will probably remain in the range of $1, 750 and $1, 850, inch said Ong Yi Ling, an analyst at Phillip Futures.
"If all of us do see $1, 700, that could potentially cause a larger correction to $1, 500. "
Spot gold lost 0. 3% in order to $1, 775. 40 an ounce by 0609 GMT, increasing a 1. 2% decline in the previous session.
The most-active US gold futures contract fell around 2% to $1, 772. 5, before recovering to $1, 778. 20.
Specialized indicators bode ill for gold prices. Spot gold costs could fall towards $1, 730 during the day, stated Reuters market analyst Wang Tao.
The dollar index rose to some seven-month high as investors piled into the greenback, lured through the appeal of short-term rates on US bonds after the actual Fed announcement.
A pricier dollar makes commodities denominated within the greenback more expensive to buy for holders of additional currencies.
"Investors are buying the dollar and selling precious metal, " said Ronald Leung, a dealer at Lee Cheong Precious metal Dealers in Hong Kong.
"But the physical supply is really a bit tight, as Asian buyers stock up on bodily gold. "
Investors are shifting their attention to the Number of 20 talks, due to take place in Washington upon Thursday and Friday, where Europe will be under large pressure to stem its deepening debt crisis.
Other gold and silver also weakened amid a commodity-wide slide.
Spot palladium dropped to some 10-month low of $680. 15, tracking a price drop in gold in addition to industrial metals.
Spot platinum dipped to a six-week reduced $1, 740. 55, before recovering to $1, 747. twenty-four.
China's factory sector contracted for a third consecutive 30 days in September as flagging overseas demand put the brakes upon new orders, HSBC's China Flash PMI data showed.
Slower growth within the world's top commodity consumer could add to pressure upon prices of silver, platinum and palladium, which have broad industrial applications.
Source : Business - Standard