June 14 (Reuters) - Gold prices steadied on Wednesday as the dollar eased, while traders assessed U.S. inflation data and its bearing on the Federal Reserve's much-awaited policy decision due later in the day.

FUNDAMENTALS

* Spot gold was up 0.1% at $1,945.29 per ounce by 0037 GMT after falling in the previous session. U.S. gold futures were flat at $1,958.30.

* The U.S. dollar eased slightly, making greenback-priced bullion more appealing to overseas buyers.

* The annual increase in the consumer price index was the smallest in more than two years, though underlying price pressures are still strong, suggesting inflation will not easily cool and might keep fuel possibilities of a Fed rate hike.

* Expectations the Fed will keep its target rate unchanged on Wednesday in a range of 5% to 5.25% are currently at 94.2%, according to CME's Fedwatch tool.

* Federal Reserve officials sat down on Tuesday for their first meeting in 15 months with no pre-determined interest rate hike on the table in what amounts to the debut gathering of the "will-they-or-won't-they" era.

* While gold is seen as a hedge against inflation, higher rates to tame price pressures generally weigh on the non-yielding asset's appeal.

* Asian markets are set for an explosive open after a below-consensus reading of headline U.S. inflation lit the touchpaper for a rally across all risky assets on Tuesday, although investors will be mindful of the steep rise in the U.S. bond yields.

* Global fund managers, meanwhile, cut their equity allocations to a five-month low, while cash levels dropped to 5.1%, their lowest since January 2022, a Bank of America survey showed on Tuesday.

* Spot silver held steady at $23.6921 per ounce, platinum rose 0.3% to $979.64, while palladium was flat at $1,361.55.

DATA/EVENTS (GMT)

0600 UK GDP Estimate MM, 3M/3M, YY April

0600 UK Manufacturing Output MM April

1230 US PPI Machine Manufacturing May

1800 US Federal Reserve's Federal Open Market

Committee announces its decision on interest

rates followed by statement

-- US Federal Reserve Chairperson Jerome Powell

holds a news conference

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips)