- Gold's appeal as an inflationary hedge is strong - analyst
- FOMC minutes due at 1900 GMT
Feb 16 (Reuters) - Gold prices steadied on Wednesday, as bullion's appeal as hedge against inflation remained intact ahead of the release of the U.S. Federal Reserve minutes due later in the day.
Spot gold was steady at $1,852.80 per ounce by 1258 GMT, but was off an eight-month high of $1,879.48 reached in the last session. U.S. gold futures 0.1% to $1,854.10.
"Inflation could prove to be more stubborn. That's why gold as an inflation hedge could remain relevant for longer," said Xiao Fu, head of commodities markets strategy at Bank of China International.
Market participants are awaiting the Fed minutes of its Jan. 25-26 policy meeting due at 1900 GMT.
The U.S. central bank will kick off its tightening cycle in March with a 25 basis-point interest rate hike, a Reuters poll found, but a growing minority point to a more aggressive half-point move to clamp down inflation.
"Once the Fed starts raising rates and... if it's faster than expected you'll see gold dropping, but I don't see a collapse," said Bernard Dahdah analyst at Natixis, adding that prices could then drop towards $1,700 and high-$1,600 range.
Rising interest rates increase the opportunity cost of holding non-yielding bullion.
Safe-haven gold touched its highest level since June 2021 on Tuesday, before closing almost 1% lower after the Russian defence ministry said it was returning some troops to their bases after exercises near Ukraine.
The United States, however, said there were signs more troops were on their way.
"Investors have attached a greater emphasis to hedging geopolitics (Russia-Ukraine), inflation concerns and broader market uncertainties," said UBS analysts in a note.
Among other precious metals, spot silver rose 0.2% to $23.38 per ounce, platinum firmed 0.1% to $1,026.77, and palladium fell 0.4% to $2,237.66.
Reporting by Asha Sistla and Seher Dareen in Bengaluru; Editing by Amy Caren Daniel