* FOMC decision due at 1800 GMT
* Dollar hovers near three-week lows
June 14 (Reuters) - Gold prices edged higher on Wednesday on expectations of a interest rate pause at the Federal Reserve's policy meeting concluding later in the day, while a softer dollar also boosted bullion.
Spot gold rose 0.4% to $1,950.09 per ounce by 0852 GMT. U.S. gold futures rose 0.2% to $1,962.90.
Fed officials sat down on Tuesday to decide the path of rate hikes ahead amidst still-strong inflation and uncertainty about both the economic outlook and effects of 10 rate hikes since March 2022.
Expectations that the Fed would keep rates unchanged at the meeting after a CPI report that was in line with expectations, along with a weaker dollar, was supporting gold, said Peter Fertig, an analyst with Quantitative Commodity Research.
The dollar hovered near a three-week low, making greenback-priced bullion more appealing to overseas buyers.
"Overall the outlook is that we're close to the peak (for Fed rate hikes) and that will reduce the attractiveness of the dollar a little," added Fertig.
Inflation was still double the 2% target of U.S. central bank, which saw markets expecting a 95% chance of a pause in June and a 63% chance of a rate hike in July, according to CME's Fedwatch tool.
While gold is seen as a hedge against inflation, higher rates to tame price pressures generally weigh on the non-yielding asset's appeal.
Key economic U.S. data for the week included weekly jobless claims on Thursday and speeches by two Federal Reserve members on Friday.
Across the Atlantic, traders assessed the Bank of England's rate hike path ahead as Britain's faced stubborn inflation at a high 8.7%, while the European Central Bank was expected to hike rates by 25 bps on Thursday.
Spot silver was up 1% at $23.92 per ounce, while platinum and palladium rose 0.2% each to $977.98 and $1,362.87, respectively.
(Reporting by Seher Dareen in Bengaluru; Editing by Shweta Agarwal)
