Gold edged up on Tuesday from the previous day`s two-week low as the dollar eased ahead of this week`s Federal Reserve meeting, which is expected to provide more clues on the pace of U.S. monetary tightening.
The dollar fell 0.3 percent against the euro ahead of the two-day talks, with markets awaiting guidance on whether the Fed will signal a further hike in interest rates at its December meeting.
Spot gold was up 0.1 percent at $1,308.36 an ounce at 0950 GMT, off the previous day`s low of $1,304.10. U.S. gold futures for December delivery were up $1.10 an ounce at $1,311.90.
The U.S. central bank is also expected to announce moves to shrink its $4.5 trillion asset portfolio, built up to spur economic growth in the wake of the financial crisis that began a decade ago.
"Normally you would expect gold to suffer from a reduction of the balance sheet, as it benefited when it was increased," Capital Economics analyst Simona Gambarini said.
"But as the Fed has been quite open about its intentions to make this happen, I don`t think, unless it announces that it intends to reduce by a lot more than markets expect, that that will happen."
The metal has fallen 4 percent since hitting a more than one-year high of $1,357.54 earlier this month, as the dollar recovered from lows and as fading concerns over North Korea`s nuclear ambitions cut demand for bullion as a haven from risk.
With attention now back on the Fed and the potential for higher interest rates, which lift the opportunity cost of holding non-yielding bullion, gold could edge back towards $1,300, analysts said.
More nervousness about North Korea could still prompt price gains, however. The country`s stand-off with the United States is likely to take centre stage at the U.N. General Assembly meeting on Tuesday, where U.S. President Donald Trump is set to speak for the first time.
Gold should run into chart support either side of $1,300, independent technical analyst Cliff Green told the Reuters Global Gold Forum on Tuesday. "A combination of previous corrective lows and congestive areas, where good two-way trading was experienced on the way up," he said.
"If this gives way, we could see $1,280 before fresh demand is stimulated."
Among other precious metals, silver was down 0.2 percent at $17.18 an ounce, while platinum was 0.3 percent lower at $956.60 an ounce. Palladium was down 0.8 percent at $928.15.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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