By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold inched up for a third straight session on Wednesday as speculation mounted that the Federal Reserve would vow to maintain interest rates at low levels when the U.S. central bank concludes its policy meet later in the day.
The Fed is expected to make a statement on policy decision at 1800 GMT, with markets awaiting hints on when the Fed would increase rates. Any increase in interest rates would dim the appeal of non-interest-bearing assets such as gold.
The Fed had said earlier that it would keep rates near zero for a "considerable time" after ending its bond-buying program, with the markets believing that no change would be made until mid-2015. Talk of an earlier rate hike have increased due to strong economic data.
Any change in the 'considerable time' guidance hinting towards an earlier rate hike "may have important ramifications for gold and would likely press prices lower", HSBC analysts said in a note.
Spot gold rose 0.1 percent to $1,236.70 an ounce by 0257 GMT, after closing up 0.2 percent in the previous session.
Still, prices were not too far from an eight-month low of $1,225.30 hit on Monday as the dollar gained in strength and reached a 14-month peak this month amid expectations of an earlier rate hike.
Bearish investor sentiment was reflected in the flows of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. The fund's holdings fell 4.18 tonnes to 784.22 tonnes on Tuesday.
The U.S. dollar, however, took a knock on Tuesday after the Wall Street Journal's Fed watcher Jon Hilsenrath said the central bank would keep the words "considerable time" in its policy statement, though it might qualify them.
Bullion investors were also eyeing Thursday's referendum on Scottish independence to gauge the impact on the dollar.
"A yes vote is likely to be bullish for gold and a no vote slightly bearish," HSBC said, adding that investor uncertainty from a yes vote would boost gold demand.
(Editing by Himani Sarkar)
