PRECIOUS-Gold dips on hopes for U.S.-China trade talks ahead of Fed statement

* U.S. Fed due to release statement at 1800 GMT
* Trump says to meet Xi at G20, trade talks to resume
* Dollar holds near two-week high
* Palladium scales new 12-week high

(Updates prices)
By Sethuraman N R
June 19 (Reuters) - Gold prices fell on Wednesday as fresh
optimism that the U.S.-China trade dispute could soon end lifted
equity markets, pressuring bullion ahead of a U.S. Federal
Reserve policy decision later in the day.
Spot gold XAU= dipped 0.2% to $1,342.86 per ounce as of
1247 GMT. U.S. gold futures GCcv1 slipped 0.3% to $1,346.40
per ounce.
"Donald Trump's tweet that he will meet (Chinese President)
Xi Jinping has created speculation in the market that there
might be some solution on the trade war," said Jigar Trivedi, a
commodities analyst at Mumbai-based Anand Rathi Shares & Stock
Brokers.
"That has supported global markets and equities have risen."
U.S. President Trump said on Tuesday he had spoken to
Chinese President Xi and that the two leaders' teams would
restart trade talks after a long lull in order to prepare for a
meeting at the G20 summit this month. World stocks held near two-week highs on Wednesday as
investors bet on a worldwide wave of central bank stimulus, with
expectations building that the United States and the euro zone
may deliver interest rate cuts as early as July. MKTS/GLOB
All eyes are now on the Fed, which is scheduled to release a
statement at 1800 GMT, followed by a news conference by Chairman
Jerome Powell. "Tonight though there won't be a rate cut (by the Fed),
there will be groundwork for future rate cuts. Markets are
focusing on that too," Trivedi said, adding gold was seeing some
profit-booking ahead of the event.
The Fed is widely expected to stand pat on monetary policy
this time, but open the door for an interest rate cut at its
next meeting in July.
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion, which had soared to a more than 14-month
high of $1,358.04 on Friday.
"A major driver of the gold price rally since 4Q18 has been
the Fed's pivot from expecting rate hikes to expecting cuts...
We expect market participants to be disappointed by the Fed's
press conference on Wednesday. This would pressure gold prices,"
Societe Generale said in a note.
Denting the metal's appeal, the dollar index .DXY held
near a more than two-week high. USD/
Silver XAG= dipped 0.2% to $14.97 per ounce, while
platinum XPT= inched 0.5% higher to $803.53.
Palladium XPD= gained 0.9% to $1,493.90 per ounce, having
hit its highest since March 27 at $1,496.51 earlier in the
session.