* Palladium off record high hit on Monday
* $1,480 a key support level for gold -analysts
(Updates prices)
By Brijesh Patel
Sept 17 (Reuters) - Gold prices were steady on Tuesday as
investors adopted a wait-and-see approach ahead of the U.S.
Federal Reserve's two-day monetary policy meeting, when the
central bank is widely expected to cut interest rates.
Spot gold XAU= was mostly unchanged at $1,498.64 per ounce
as of 1110 GMT.
Gold prices rose more than 1% early Monday before settling
0.6% up for the day after a weekend attack on oil facilities in
Saudi Arabia inflamed worries over stability in the Middle East.
U.S. gold futures GCv1 were down 0.3% at $1,506.70 an
ounce.
"The market is relatively stable, there is so much
(interest) pointed towards the Fed meeting tomorrow, it seems
like traders have taken a little bit of a pause," said OANDA
senior market analyst Craig Erlam.
"Gold got a bit of a bounce yesterday from the geopolitical
(fallout) from the attacks, but it didn't even break the $1,520
level on the news, which suggests that gold is a little
vulnerable, with $1,480 being the key support level."
The Federal Open Market Committee (FOMC) is widely expected
to cut interest rates at its two-day meeting starting later in
the day. It would be the central bank's second such cut after
lowering rates in July for the first time since the financial
crisis. FEDWATCH
The expected decision from the Fed could put pressure on the
Bank of Japan to ease policy at a meeting due on Thursday.
Lower interest rates decrease the opportunity cost of
holding non-yielding bullion and weigh on the dollar, making
gold cheaper for investors holding other currencies.
However, the dollar index .DXY held on to Monday's gains
to stand at 98.645. USD/
Gold prices have climbed nearly 18%, or more than $200,
since touching a 2019 low of $1,265.85 in early May, driven by a
dovish outlook from major central banks, escalation in the
U.S.-China trade war and Middle East tensions.
Attacks on Saudi Arabia's main oil refinery over the weekend
have also entered the equation, prompting U.S. President Donald
Trump to apply more pressure on the Fed to lower rates.
"It appears conviction remains positive so long as gold
hangs around $1,500," AxiTrader strategist Stephen Innes said in
a note, adding that the market has been caught between hedging
against a possible U.S. military response on Iran and
position-squaring ahead of the Fed's meeting.
Elsewhere, silver XAG= edged 0.1% lower to $17.83 an ounce
and platinum XPT= eased 0.1% to $936.19.
Palladium XPD= slipped 0.7% to $1,593.80 after touching a
record high of $1,626.81 in the previous session.