Gold prices edged up on Wednesday to hover near their highest in more than two weeks on prospects of higher inflation, although trade was range-bound as investors exercised caution ahead of the US Federal Reserve's two-day policy meeting outcome.

Spot gold was up 0.3% at $1,736.42 per ounce by 0455 GMT, having earlier touched a level unseen since March 1 at $1,740.90. US gold futures were up 0.3% at $1,735.40.

"Gold appears to be finding few friends finally even as US yields and the dollar continue to grind higher perhaps gold's inflation hedging role is quietly returning to prominence and that is supporting prices," said OANDA senior market analyst Jeffrey Halley.

Some investors view gold as a hedge against higher inflation that could follow stimulus measures, but a resultant rise in Treasury yields tends to dull the appeal of the non-yielding commodity.

"Gold's true test though will come once the FOMC meeting concludes and if it can remain steady in the face of another spike in US yields, should that occur," Halley said.

The US dollar gained for a fourth session, supported by elevated US yields on expectations of a stronger economic recovery after a $1.9 trillion recovery package was signed into a law last week.

The Fed is expected to announce its decision on interest rates at 1800 GMT on Wednesday. Investors will eye policymakers' remarks on a recent spike in bond yields, fears about rising inflation and the economic outlook.

While the market awaits the Fed statement, the technical picture remains bearish, Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

"The main trend will change upwards when buyers take up positions above $1,760 an ounce," Sandu said.

In other metals, silver fell 0.2% to $25.90 an ounce. Palladium shed 0.3% to $2,490.16, having hit a one-year high of $2,520.31 on Tuesday, and platinum was down 0.4% to $1,207.56.