Gold prices edged lower in European trade on Wednesday, as market players looked ahead to the outcome of the Federal Reserve's policy meeting for insight on the timing of the next U.S. rate hike and clues on how the central bank plans to pare back its balance sheet.

Comex gold futures were at $1,244.75 a troy ounce by 2:55AM ET (0655GMT), down $7.40, or about 0.6%. Gold prices ended lower on Tuesday, suffering the first back-to-back decline in about three weeks.

The Fed is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (1800GMT), keeping it in a range between 1.0%-1.25%.

The central bank will release its post-meeting statement as investors look for any change in language which could point more clearly to the timing of its next rate hike. Market players will also pay close attention to details of when and how the Fed will start reducing its $4.5 trillion balance sheet.

The Fed's comments on inflation will also be in focus.

According to Investing.com’s Fed Rate Monitor Tool, conviction for another rate hike before the end of the year has faded, with just 40% of market players expecting another move by December, as the subdued inflation outlook raised doubts over whether policymakers will be able to stick to their planned tightening path.

Focus will also be on headlines coming out of Washington, where the Senate is expected to continue working to repeal Obamacare. The investigation into U.S. President Donald Trump campaign's ties to Russia will continue to get attention.