Spot gold inched 0.3% higher to $4,040.63 per ounce

Gold edged ​higher on Wednesday, supported by a weaker dollar.

Spot gold inched 0.3% higher to $4,040.63 per ounce by 0656 GMT. U.S. gold futures ​for August delivery were steady at $4,038.90.

The dollar eased, making dollar-priced bullion more affordable ​for holders of other currencies.

Gold is very much connected to today’s FOMC ⁠meeting. The scenario that may see a potential reversal of the recent bearish bias ​in gold prices will be the Fed turning to a less hawkish rhetoric, said Kelvin ​Wong, a senior market analyst at OANDA.

The U.S. central bank’s policy decision is due at 1800 GMT, and the bank Chair’s comments are scheduled for 1830 GMT.

Market expectations indicate a 68% probability that the central bank will hold ​rates steady and a 32% chance of a 25-basis-point hike, according to the FedWatch ​tool. Markets are pricing in a 77% probability of a rise in September.

Meanwhile, ⁠the Bank of Japan is widely expected to keep rates unchanged on Thursday and Friday, respectively, and to caution against rising inflation.

Gold is seen as a hedge against inflation, and higher rates increase the opportunity cost of holding the non-yielding metal.

On the geopolitical front, ​ U.S. reportedly intercepted attacks by Iran towards U.S. forces on Tuesday in what Washington cast as a surprise attack by ​Tehran.

Oil prices drifted higher, supported by declining U.S. crude inventories.

Commerzbank on Tuesday lowered its year-end gold price forecast to $4,500 per troy ounce and ⁠said it ​expects silver to reach $67 per troy ounce by ​the end of the year.