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Gold prices fell on Tuesday as the US dollar and equities gained ahead of a much-awaited US Federal Reserve meeting that could provide a timeline on interest rate hikes amid rising inflationary pressures.

Spot gold was down 0.3pc at $1,787.04 per ounce by 01:35 p.m. EDT (1735 GMT). US gold futures settled down 0.4pc to $1,789.40.

Persistent strength in equities ahead of Fed's statement on Wednesday continues to weigh on safe-haven metals, said Jim Wyckoff, senior analyst at Kitco Metals.

But recent concerns over inflation have limited the downside for gold and helped buying interest, Wyckoff said.

While gold is used as a hedge against inflation, reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding non-yielding bullion.

Gold prices ease on dollar uptick as Fed policy verdict looms

The Fed is expected to approve plans to scale back its bond-buying programme on Wednesday, when it concludes a two-day policy meeting.

"I expect the Fed will announce the start of tapering but I do not see them giving a specific timing around a rate hike," said Carsten Fritsch, a commodities analyst at Commerzbank.

"That may lead to some disappointment because market participants are expecting something more specific that could push gold towards $1,800 per ounce or even beyond that."

The dollar index strengthened, making gold more expensive to holders of other currencies.

Markets will also be watching the Bank of England policy meeting on Thursday.

"The week ahead could be volatile for gold prices ... the yellow metal is likely to be influenced by the dollar's movements, Treasury yields, inflation expectations and global risk sentiment," Lukman Otunuga, a senior research analyst at FXTM, said in a note. Silver fell 2.3pc to a two-week low of $23.46 per ounce.

Platinum slipped 2.4pc to $1,038.82 per ounce, while palladium declined 1.8pc to $2,011.69.

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