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Gold rose on Wednesday reversing earlier losses, as the dollar pared gains ahead of the U.S. Federal Reserve's policy outcome due later in the day, which is mostly expected to keep interest rates unchanged.

The dollar index, which measures the greenback against six major currencies, pared gains and was nearly flat at 96.135 after rising as much as 0.3 percent.

"There is no realistic chance of a rate hike priced into the market at the moment, so if the Fed hikes interest rates this evening we would definitely see a sell-off in Commodities and the emerging markets, including gold," said Jeffrey Halley, senior market analyst, OANDA. "If the Fed stays pat, we are going to see a big rally in commodities. We will definitely see gold and silver moving higher as well."

"Gold prices have been consolidating for the past few days. As long as prices remain within $1,300 levels, gold will most likely rally," said Hareesh V, research head at Geofin Comtrade Ltd.

Reference: Reuters