Gold prices rebounded from two-month lows on Wednesday as the dollar pulled away from multi-month highs amid profit taking ahead of the conclusion of the Federal Reserve policy meeting later in the day.

Gold futures for June delivery on the Comex division of the New York Mercantile Exchange were up $4.10 or 0.31% to $1,310.90 a troy ounce by 04:10 AM ET (08:10 AM GMT).

Prices of the precious metal hit a low of $1,302.40 on Tuesday, which was the weakest level since March 1.

Gold recovered as the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, slid 0.21% to 92.09, pulling back from Tuesday’s four-month highs of 92.37.

A weaker U.S. currency makes dollar denominated gold less expensive for overseas buyers.

The upside for gold looked likely to remain limited as metal traders looked ahead to a Fed meeting that is expected to point to another two or possibly even three rate hikes this year.

Data on Tuesday indicated that while U.S. factory activity slowed slightly in April inflationary pressures are building.

Another report earlier this week showed that the Fed’s preferred measure of inflation accelerated to its highest in more than a year in March, while data last week showed that wages grew at their fastest pace in in eleven years in the first quarter.

Rising inflation would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently expected. Fed officials projected three increases in 2018 at their meetings December and March.

While the Fed is expected to keep interest rates on hold at the conclusion of its policy meeting later Wednesday policymakers are widely expected to line up their next rate hike in June.

Markets are also looking ahead to Friday’s U.S. employment report for April, which could provide further signs of strength in the world's largest economy.

Expectations for a faster pace of rate hikes tend to be bearish for gold, which struggles to compete with yield bearing assets when interest rates rise.