(Updates with comment, refreshes prices) * Dollar/gold correlation tightens * Consumer demand off; ETPs see steady outflows * Gold/silver ratio climbs * Coming up: FOMC June meeting minutes; 1800 GMT By Amanda Cooper LONDON, July 11 (Reuters) - Gold edged up on Wednesday, but retreated from the day's highs after the dollar pared some losses ahead of the release of U.S. central bank meeting minutes, while growing evidence of waning investor demand for the metal raised the risk of a price slide. Spot gold was up 0.4 percent on the day at $1,572.76 an ounce by 1343 GMT, having risen earlier by as much as 1 percent, while U.S. gold futures fell 0.4 percent to $1,573.20 an ounce. The dollar recovered from intraday lows to hold around its highest in nearly two years against the euro, which has taken little comfort this week from the slow progress of European leaders in solving the debt crisis. Hopes for a quick ruling from Germany's Constitutional Court on whether the European Stability Mechanism (ESM) and planned changes to the euro zone's budget rules were compatible with German law were dashed after it emerged the decision could take several weeks. With few cues for gold coming from Europe, the focus in the market shifted to the United States, where the Federal Reserve releases the minutes from its June policy meeting later. Traders will scour the statement for any sign of greater dovishness among the rate-setting committee members that could be interpreted as raising the chances for the Fed to use additional policy tools to boost growth. "The strong dollar is capping everything and gold in particular. There is a very strong inverse relationship (between the two) and I still see maybe a move to have a look at the $1,550 area after the minutes," Societe Generale analyst Robin Bhar said. "The market will be disappointed, it's clutching at straws and wants something to act as a catalyst to move through $1,600 and towards $1,620," Bhar said, adding: "There is a lot of hesitation on the part of the investor because gold is continuing to underpeform for the obvious reasons and I don't see that changing in the near future." The correlation between gold and the dollar index is close to its most negative in nearly two years, around -0.69, meaning the two assets are more likely to move inversely to one another now than they were at the start of July when this correlation was closer to -0.25. The central bank has pledged to leave U.S. benchmark interest rates near zero until at least late 2014 and has already spent over $3 trillion in the last 3-1/2 years in direct purchases of government bonds to pin down borrowing rates. That has not dampened the speculation among investors that the Fed will embark on a fresh round of bond-buying to invigorate what has been a patchy economic recovery. Low interest rates, particularly on the U.S. dollar, create a more favourable environment for investing in gold, as it can compete more effectively for investor cash when loose monetary policy cuts the yield on bonds and can undermine stock returns. Since the Fed initiated its campaign of anchoring rates by purchasing Treasuries, a tool known as quantitative easing, in late 2008, the gold price has more than doubled in value. Gold's propensity to trade in line with higher-yielding, higher-risk assets has stripped nearly 13 percent off the price in 3-1/2 months and investors are becoming increasingly wary. Holdings of gold in the world's largest exchange-traded products (ETPs) fell to their lowest since mid-June by Tuesday's close, after having fallen by nearly a quarter of a million ounces in two trading days, their largest two-day drop since May this year. The bulk of the outflows are coming from the SPDR Gold Trust , the world's largest gold ETP, which has shed 333,500 ounces in the last three weeks. Consumer demand for gold has also been subdued. In India, where the government in the world's largest bullion buyer has raised import duties and taxes on the metal, any weakness in the rupee against the dollar suppresses purchases. Local dealers have reported fairly weak demand this week. Silver rose by 0.7 percent on the day to $27.00 an ounce, yet has underperformed gold consistently since late February. The gold/silver ratio - the number of ounces of silver needed to buy one ounce of gold - has risen to 58.3 from a six-month low of 48.0 in late February. The silver price is also trading close to its lowest levels this year, having echoed the persistent weakness in gold to fall by nearly a third in value since the end of February. "Silver remains above the key support zone of $26.40/26.08 ... Like gold, it will have to break above the resistance line developing since March at 28.00/28.20 to spark a sustained rally," Societe Generale technical analyst Stephanie Aymes said in a note. Platinum rose 0.3 percent on the day to $1,421.25 an ounce, while palladium rose 1.1 percent to $577.00. (Editing by xxxxx)

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