Gold inches up as Fed leaves rates unchanged

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Gold inched up slightly on Wednesday, recovering most of its losses, following the release of a Federal Reserve decision, which kept monetary policy unchanged, as was expected.

Investors were then looking for clues about the central bank's next move. The Federal Open Market Committee released a statement containing key language that points to starting the move upward in rates in September.

The "relatively soon" phrase is the crux of the statement. Fed watchers had been looking for the language to change from "this year," as indicated following the June meeting, to something more immediate.

Meantime, company results and economic data have been largely upbeat of late.

Germany's Ifo business survey on Tuesday also showed confidence, soaring to record highs in July, while U.S. consumer confidence levels jumped to near 16-year highs, boosting the dollar.

Traders said short dollar positions were being trimmed on Wednesday ahead of the Federal Reserve's policy decision.

"It's mainly sky rocketing risk appetite that's weighing on gold. ... US stocks closed at record highs, bonds tumbled, yields increased sharply and these are the ingredients for lower gold prices," said Commerzbank analyst Carsten Fritsch.

"Stocks seem immune, at least for the moment, against a rather uncertain economic outlook and the political mess in Washington, and unless this changes gold will struggle to make meaningful gains."

Spot gold last climbed 0.52 percent to $1,255.09 per ounce.

U.S. gold futures for August delivery climbed 0.22 percent to $1,254.70 per ounce, teetering between positive and negative territory.

"The technical break during Asian trade today saw some participants heading for the exits as we near the FOMC rates announcement and it is difficult to see gold making any headway above $1,250 leading into the Fed," said MKS in a note before the announcement.

"A hawkish tone from Yellen today will open up a test toward the 200 day moving average $1,229, while a dovish skew is likely to see a recovery test (at between) $1,258 - $1,262."

Also weighing on gold, holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.13 percent to 800.45 tonnes on Tuesday from 809.62 tonnes on Monday.

In other precious metals, silver was up 0.66 percent at $16.57 per ounce.

Platinum edged up 0.38 percent to $927.00 per ounce, while palladium rose 0.70 percent to $863.00 per ounce.

—CNBC's Lauren Thomas and Jeff Cox contributed to this reporting.