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Gold edged slightly lower on Wednesday as the dollar and equities firmed ahead of the U.S. Federal Reserve's policy decision due later in the day when it is expected to keep interest rates unchanged.

The Fed is likely to defer any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation.

"Prices are going to remain on the sidelines leading into the meeting. Certainly, the pricing on the probability of a hike is probably low," said ANZ analyst Daniel Hynes.

"Investors are mindful of the macro environment, which is broadly positive. For the moment, it is a wait and see environment."

GFMS said “We have revised our 2016 average gold price forecast to $1,279/oz from $1,184/oz forecast in April. The revision is a mark to market of the impressive gains that gold has posted so far this year, and reflecting the changed sentiment stemming from increased uncertainty from economic and political outlooks. These include Brexit, reduced expectations of a rate rise from the Fed, a wobbly Italian banking sector and the U.S. Presidential race.”

China's annual gold consumption is expected to be 1,200 tonnes by 2020, state-owned Shanghai Securities News reported on Wednesday, citing an estimate from a Ministry of Industry and Information Technology (MIIT) official.

China, the world's top gold consumer and miner, consumed a total of 528.52 tonnes of gold in the first six months of 2016, down 7.68 percent from a year earlier, Shanghai Securities News said on Tuesday citing the country's gold association.

Reference: Economic Times, Reuters