Gold turned higher on Wednesday as stock markets surrendered gains ahead of a policy statement from the Federal Reserve, with traders awaiting news on whether the U.S. central bank will further trim its bond-buying programme.

The precious metal fell earlier as equities recovered losses linked to a sell-off in emerging markets last week, which had boosted interest in gold as an alternative asset. It rebounded, however, as relief in emerging markets looked to be short-lived.

Spot gold was up 0.4 percent at $1,261.80 an ounce at 1316 GMT, off an early low of $1,249.04. U.S. gold futures for February delivery rose $10.40 an ounce to $1,261.20.

European stocks erased gains to fall 0.2 percent in early afternoon trade, while U.S. stock index futures were down.

"At the moment we're seeing quite a bit of churn in the S&P ahead of the open - we're now down on the day after being up earlier," Saxo Bank's head of research Ole Hansen said. "That may be what's just lending support (to gold) at the moment."

In an statement at the end of their two-day policy meeting at 1900 GMT, Fed policymakers are expected to announce they will cut monthly purchases of Treasuries and mortgage-backed securities by $5 billion each, bringing the total of their monthly asset purchases to $65 billion.

Expectations that the Fed would rein in the extraordinary measures it put in place to boost the U.S. economy after the financial crisis were a major factor driving the 28 percent fall in gold prices last year.

Although a steady scaling back of the programme is now largely priced into the market, any sign that it is moving more quickly or slowly than expected could still affect gold prices.

CHINESE BUYING SLOWS

Chinese buying has slowed this week as traders and consumers wrap up for the Lunar New Year holiday, which starts on Jan. 31. Chinese markets will be closed until Feb. 6.

Premiums for 99.99 percent purity gold on the Shanghai Gold Exchange fell to about $5.50 an ounce on Wednesday from $7 in the previous session. They were as high as $20 in early January.

Trading volumes on the exchange on Wednesday were a little over 8 tonnes, the lowest since Dec. 31.

Demand for 'new' jewellery in India - until recently the world's largest bullion buyer - was fairly light as most consumers make use of old gold jewellery recycled into new pieces for the wedding season, dealers said. Premiums stayed steady at $80 an ounce over London prices.

Silver was up 0.7 percent at $19.69 an ounce. Spot platinum was up 0.3 percent at $1,409.25 an ounce, while spot palladium was up 0.2 percent at $715.70 an ounce.

Government-brokered talks between the world's top three platinum producers and South Africa's striking AMCU union continued on Wednesday as miners gathered for a rally near Lonmin's Marikana operation.

The impact of the strike on platinum prices has been subdued.

"Producers stockpiled platinum ahead of the wage negotiations in order to absorb potential shortfall from mine output losses," HSBC said in a note.