By A. Ananthalakshmi SINGAPORE (Reuters) - Gold edged higher on Wednesday as investors bet the Federal Reserve would stick to its bullion-friendly stimulus measures but the metal was still trading below five-week highs as a stronger dollar kept gains in check. Gold has gained about 7 percent from a three-month low hit on October 15 on hopes that weak U.S. data and the repercussions of budget battles in Washington would prompt the Fed to delay the winding-down of its $85 billion monthly bond purchases. Spot gold ticked up 0.2 percent to $1,346.11 an ounce at 0702 GMT after hitting a session low of $1,339.14 earlier. Gold prices slipped on Tuesday from the previous session's five-week high as traders took profits after the dollar strengthened, raising the possibility that Fed expectations might already be priced into markets. "Gold has always been right up there as the commodity that is most exposed to any Fed decision to cut back on bond purchases," said Song Seng Wun, an economist at CIMB. "The (Fed) meeting will decide whether more money will be taken off the table or whether there will be a rebound." Song said any rise in gold would depend on U.S. economic data, among other key factors determining when the Fed moves to reduce its stimulus. The Fed will make a statement later on Wednesday at the end of its two-day meeting. It is widely expected to say it will continue with its stimulus measures and will not reduce its asset purchases. Chinese gold prices recovered slightly on Wednesday after ending at a discount to global prices in the previous session for the first time this year. Fears of a credit tightening had prompted Chinese investors to sell bullion for cash. Indian premiums stayed near record highs due to a supply crunch.

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