By Eric Onstad
LONDON (Reuters) - Gold dipped on Monday, pressured by a firmer dollar and worries that the U.S. central bank will signal a tighter future monetary policy at a meeting this week that is expected to boost rates.
Spot gold was down 0.2 percent at $1,295.35 per ounce at 0955 GMT, while U.S. gold futures for August delivery were 0.3 percent lower at $1,299.20 per ounce.
The U.S. Federal Reserve will likely raise its target interest rate to above the rate of inflation for the first time in a decade this week, seeking to sustain the second-longest U.S. expansion on record while continuing to edge rates higher.
"Everybody's on the sidelines, waiting for the outcome of the Fed meeting. There's a tug of war on views on what kind of message the Fed will put out," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
"My personal view is that the Fed will surprise with a hawkish mode, which will see a spike in the dollar and produce a brief but deep sell-off of precious metals."
That would open up an opportunity for investors to go long in gold since a seasonal rally is expected over the summer, Torlizzi added.
The dollar index, which measures the greenback against a basket of six major currencies, rose 0.1 percent.
Trump said Tuesday's summit could "work out very nicely" as officials from both countries met to narrow differences on how to end a nuclear stand-off on the Korean peninsula.
"The market opened predictably quiet ahead of the abundance of risk events this week and wholly ignored President Trump going rogue at the G7," Stephen Innes, APAC trading head at OANDA said, adding that with geopolitical risk moderating, it will be the Fed and ECB that will guide gold's near-term fate.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 828.76 tonnes on Friday, the lowest since February 22.
In other precious metals, silver gained 0.2 percent to $16.77 an ounce, after hitting a seven-week high of $16.93 earlier in the session.
Palladium dropped 0.4 percent at $1,010 an ounce, while platinum shed 0.3 percent to $899 an ounce. It touched a one-week high of $910.50 earlier in the session.
(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Adrian Croft)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)