Gold steady on caution ahead of Fed meeting

BENGALURU (Reuters) - Gold held steady on Tuesday as investors remained cautious ahead of a two-day U.S. Federal Reserve meeting that is likely to provide hints on the central bank's interest rate policy for the remainder of the year.

FUNDAMENTALS

* Spot gold was nearly flat at $1,264.61 per ounce at 0057 GMT.

* U.S. gold futures for August delivery fell 0.2 percent to $1,266.9 per ounce

* Palladium, which hit a 16-year high on Friday, was up 0.1 percent at $896 an ounce.

* The Fed starts a two-day meeting on Tuesday, where it is widely expected to hike interest rates. The focus is on whether the Fed thinks the U.S. economy is robust enough to withstand further rate increases through 2017.

* Higher rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies.

* U.S. inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank's concern over a broad slump in prices.

* Britain's descent into political crisis just days before Brexit talks begin has sapped confidence among business leaders and infuriated bosses who were already grappling with the fallout from the vote to leave the EU.

* Euro zone finance ministers and the International Monetary Fund are likely to strike a compromise on Greece on Thursday, paving the way for new loans for Athens while leaving the contentious debt relief issue for later, officials said on Monday.

* A small majority of traders in China's financial markets think its central bank will likely raise short-term interest rates this week if the Fed hikes its key policy rate, as widely expected, according to a Reuters poll.

* South Africa's Sibanye Gold said on Monday that 202 illegal miners have now been arrested at its Cooke operations southwest of Johannesburg since the start of a violent wildcat strike last Tuesday.

(Reporting by Nithin Prasad in Bengaluru; Editing by Joseph Radford)