Gold edged up on Wednesday, but retreated from the day's highs after the dollar pared some losses ahead of the release of U.S. central bank meeting minutes.

The dollar recovered from intraday lows to hold around its highest in nearly two years against the euro, which has taken little comfort this week from the slow progress of European leaders in solving the debt crisis.

Hopes for a quick ruling from Germany's Constitutional Court on whether the European Stability Mechanism (ESM) and planned changes to the euro zone's budget rules were compatible with German law were dashed after it emerged the decision could take several weeks.

Traders will scour the statement for any sign of greater dovishness among the rate-setting committee members that could be interpreted as raising the chances for the Fed to use additional policy tools to boost growth.

The central bank has pledged to leave U.S. benchmark interest rates near zero until at least late 2014 and has already spent over $3 trillion in the last 3-1/2 years in direct purchases of government bonds to pin down borrowing rates. That has not dampened the speculation among investors that the Fed will embark on a fresh round of bond-buying to invigorate what has been a patchy economic recovery.

Low interest rates, particularly on the U.S. dollar, create a more favourable environment for investing in gold, as it can compete more effectively for investor cash when loose monetary policy cuts the yield on bonds and can undermine stock returns.

August gold futures on the COMEX today rose and now stands at $ 1581.0 USD per ounce.