Gold rebounds on dollar, Fed minutes show uncertainty

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Gold rose on Wednesday as the dollar softened, reversing after touching a four-month low as markets watched the tumble in Chinese stock markets and the unfolding Greek debt crisis.

The price of the yellow metal did not react to the June U.S. Federal Reserve policy meeting minutes that showed officials saying they needed to see more signs of a strengthening U.S. economy before raising interest rates.

"There was a bit of ambiguity there," said Bart Melek, head of commodity strategy for TD Securities in Toronto, explaining why the gold market failed to react to the minutes.

"The Fed wasn't fully committed. They hedged their bets saying they want to do it but are concerned about the international aspects."

Melek was referring to expectations the Fed will raise interest rates later this year.

If Greece can't get gold going, what will?
If Greece can't get gold going, what will?   

San Francisco Fed President John Williams said the Fed will likely raise rates this year but should only do so when there are firmer signs inflation is headed back up toward the central bank's 2 percent target.

Spot gold was up 0.5 percent at $1,161.02 an ounce, after falling to $1,146.75, its lowest since March 18, in earlier trade. U.S. gold futures for August delivery settled up $10.9 at $1,163.50 an ounce.

Other precious metals fell sharply early, with platinum approaching the $1,000 an ounce mark for the first time in more than six years before paring losses.

"The appetite to buy gold on the dovish minutes is limited by gold up a percent on the day and a percent and a half from lows," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

Read MoreAsian stocks dive amid worries over China, Greece

The dollar fell 0.6 percent against a basket of leading currencies.

In recent weeks, the U.S. currency had been boosted by weakness in the euro as uncertainty persisted over Greece's fate in the euro zone.

Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin.

Silver was up 0.6 percent at $15.13, after a 4.4 percent tumble to the lowest since December 2014 on Tuesday. Palladium was up 0.5 percent to $650.50 an ounce, after falling 3 percent to $627.72 an ounce, a two-year low.