PRECIOUS-Gold firms on Fed rate-cut bets; focus on future guidance

* Fed monetary policy meeting on July 30-31
* Markets also eye U.S.-China trade talks this week
* Spot platinum gains about 2%

(Updates prices)
By K. Sathya Narayanan and Diptendu Lahiri
July 29 (Reuters) - Gold prices firmed on Monday on
expectations of a rate cut by the Federal Reserve this week,
while investors awaited cues on the future trajectory of
monetary easing by the U.S. central bank.
Spot gold XAU= inched up 0.2% to $1,420.51 per ounce as of
1:36 p.m. EDT (1736 GMT). U.S. gold futures GCcv1 settled up
0.1% at $1,420.40.
"Clearly, the gold market is going to be somewhat on hold
awaiting Fed commentary on Wednesday. We know that we are
getting a 25 basis-point (bps) cut. (But) on Wednesday, the
question will be what to look ahead for from there," said David
Meger, director of metals trading at High Ridge Futures.
Federal funds futures FEDWATCH implied traders saw a 77%
chance of a 25 bps rate cut at the U.S. central bank's July
30-31 policy meeting.
"Much will also depend on what Fed Chair Jerome Powell says
in the subsequent press conference: If he makes no mention of a
cycle of rate cuts, causing gold to come under pressure, we
would not see this as a trend reversal but as an attractive
buying opportunity," analysts at Commerzbank said in a note.
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion and weigh on the dollar.
The dollar .DXY held close to a two-month peak against key
rivals. A stronger greenback makes dollar-denominated assets
such as gold costlier for investors holding other currencies.
USD/
"We have seen the dollar slowly gaining in the last couple
of weeks. It has not caused any significant correction but had
caused a pause in gold trading," High Ridge Futures' Meger
added.
Market participants will also keep a close eye on U.S.-China
trade talks in Shanghai this week, as negotiators from both
countries meet for their first in-person talks since a truce at
a meeting on the sidelines of a G20 summit in Japan last month.
Expectations are low for a breakthrough. Gold is a preferred asset during times of economic and
political uncertainties.
Hedge funds and money managers reduced their bullish stance
in COMEX gold in the week to July 23, the U.S. Commodity Futures
Trading Commission (CFTC) said on Friday. On the technical front, $1,400 will be the key downside
support for gold, and beyond that, $1,380, OANDA senior market
analyst Craig Erlam said.
"Bulls are very reluctant to let go just yet, but if we do
see those levels break, we might see gold bulls head for the
exits quite quickly."
Among other precious metals, silver XAG= inched up 0.1% to
$16.40 per ounce.
Palladium XPD= rose 1.3% to $1,555.62 per ounce, after
touching its highest level in nearly two weeks, while platinum
XPT= climbed 2% to $877.50.