Gold prices on Wednesday were lifted from near one-month lows by weaker Treasury yields, ahead of a potentially aggressive interest rate hike from the U.S. Federal Reserve as it seeks to combat inflation amid mounting fears of an impending recession.

Spot gold was up 0.5% at $1,817.12 per ounce as of 0229 GMT, after dropping to its lowest since May 16 at $1,803.90 on Tuesday.

U.S. gold futures rose 0.3% to $1,818.50. The Federal Open Market Committee is expected to announce its decision on interest rates at 1800 GMT later in the day.

"In our opinion it is more likely to expect the gold price to rally before the session (Fed announcement), stay stable and then over the course of the following week continue its downward trend," said Michael Langford, director at corporate advisory AirGuide.

Investors have dramatically raised their bets that the Fed will raise interest rates by 75 basis points (bps) rather than 50 bps, a swing in expectations which has fuelled a violent selloff across world markets.

Rising short-term U.S. interest rates and bond yields increase the opportunity cost of holding bullion, which yields no interest. Benchmark U.S. 10-year Treasury yields eased from a multi-year peak, supporting gold.

"Over the next few weeks in our opinion the overall downward trend in the gold price will be maintained with gold breaking below $1,800/oz," Langford said.

Asian markets were in a pensive mood as shell-shocked investors waited to see just how aggressive the Fed would be on rates, with many fearing drastic action would risk tipping the world into recession.

The dollar steadied near the previous session's two-decade high, making greenback-priced bullion less attractive for buyers holding other currencies.

Spot silver gained 0.7% to $21.22 per ounce, while platinum rose 0.8% to $926.89, and palladium firmed 0.5% to $1,824.71.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Rashmi Aich and Shailesh Kuber)