Gold edged up on Wednesday, tracking an increase in ETF holdings as investors sought a safe haven from sliding stock markets and worries about the pace of global economic recovery.

Although this week's meeting by U.S. Federal Open Market Committee may not bring surprises, investors want to hear what the Fed has to say about the impact of Europe's debt crisis on the U.S. economy.

Spot gold added $1.20 to $1,240.20 an ounce by 0254 GMT after hitting an intraday high of $1,241.25 -- still below Monday's record around $1,264. Gold has gained as much as 15 percent in 2010, mainly due to fears the sovereign debt crisis in Europe would spread.

I think there's also probably still a pool of investors that have longer-run concerns about inflation and that sort of thing, said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney.

There's still uncertainty about the rate of the international economic recovery, and I think that's probably helping gold as well, he added.

For a graphic on the spot gold technical outlook, see: here

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD.P) said its holdings rose to a record at 1,313.135 tonnes as of June 22 -- the first increase since June 17, when holdings stood at 1,307.963 tonnes.

U.S. gold futures for August delivery was unchanged at $1,240.1, having struck a lifetime high on Monday.

When it got above $1,260, I am sure there was probably a bit of profit taking there. But there are a number of reasons why investors have an interest in gold, said Moore of CBA.

I think they see it as a safe haven given the European fiscal problems.

The euro slipped to $1.2262 ahead of the FOMC rate decision later in day as a recent risk rally appeared to have run its course and the euphoria from China's new yuan policy waned.

But the U.S. Fed is expected to restate its intention to keep rates near zero and perhaps offer a less upbeat outlook. A Fitch rating downgrade of French bank BNP Paribas (BNPP.PA) and a surprise decline in May U.S. existing home sales renewed concerns over the health of the U.S. economy.

In the physical sector, sale of gold scrap slowed to a trickle as holders waited for bullion to rise further.

I am still bullish on gold. ETF continues to absorb physicals metals. But there's not much going today even though price dropped below $1,240 yesterday, said a dealer in Hong Kong, referring to a lack of interest from jewelers.

Japan's Nikkei average fell 1.6 percent on Wednesday, sliding to a its lowest in almost a week and back toward a key support level, after poor U.S. housing data triggered a fall in Wall Street. .T .N

(Editing by Himani Sarkar)

China Gold Investment