Gold edges up as equities slip ahead of US Fed meeting

Gold rose for a second straight session Tuesday as equities wavered ahead of a two-day US Federal Reserve meeting in which interest rates are mostly expected to remain unchanged.

Spot gold was up 0.2 per cent at $1,315.51 an ounce by 0443 GMT, while US gold futures were steady at $1,319 an ounce.

Asian shares edged lower on Tuesday as investors nervously awaited the outcomes of both the US central bank and Bank of Japan policy meetings this week.

A range of mixed economic figures and conflicting remarks by key Fed policymakers have kept investors guessing over the timing of the next US rate hike.

Recent weak US data has boosted bets the Fed will skip raising rates this month, but investors will listen closely to Chair Janet Yellen's speech on Wednesday for any hint the bank could hike rates before the end of the year.

"Even if there is an interest rate hike in September, the selling pressure in gold will be diluted," said Mark To, head of research at Hong Kong's Wing Fung Financial Group, because investors have already factored that into their risk scenarios.

Rising US interest rates typically increase the opportunity cost of holding non-yielding bullion and boost the dollar, which makes it more expensive to buy gold for those holding other currencies.

Spot gold looks neutral in a range of $1,313-$1,319 per ounce, and an escape could point a direction, according to Reuters technical analyst Wang Tao.

"Everyone is waiting for the Fed's decision tomorrow and it is extremely hard to guess this time," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"However, whenever the prices are touching below $1,310, there is strong interest to buy gold," added Leung.

Japan's central bank also meets on Tuesday and Wednesday, and could make negative interest rates the primary focus of its monetary policy, moving away from quantitative easing.

Among other precious metals, spot silver rose 0.3 per cent to $19.20 an ounce. The metal was up nearly two per cent in the previous session.

Platinum was up 0.3 per cent at $1,023.65 per ounce.

Palladium rose 0.3 per cent to $685.15, after rising as much as two per cent in both of the two prior trading days.