Gold prices steadied on Tuesday, a day before the conclusion of the Federal Reserve's two-day policy meeting, as investors awaited more information on the outlook for interest rate cuts by the US central bank.

Spot gold was up 0.2% at $1,429.38 per ounce as of 1:45 p.m. EDT (1745 GMT).

US gold futures settled 0.7% up at $1,429.70

"The market is anticipating a cut at the Federal Open Market Committee (FOMC) meeting tomorrow, but what is up in the air is the extent of the dovish or hawkish comments," said Daniel Ghali, commodity strategist at TD Securities.

"If Fed Chair Jerome Powell comes out with a more dovish-than-expected statement, gold might hit a multiyear high."

Market participants expect the US central bank to cut its benchmark interest rate for the first time since the financial crisis more than a decade ago. Federal funds futures implied traders saw an 81% chance of a 25 basis-point rate cut.

The Federal Reserve is scheduled to announce its monetary policy decision at 2 p.m. EDT on Wednesday as well as issue a statement.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

"Liquidity is still thin as traders seem to be holding back before the Fed gives its views on monetary policy," said Benjamin Lu, an analyst at Phillip Futures, adding that a firm dollar was putting pressure on gold prices.

The dollar held close to a two-month peak against key rivals, making greenback-denominated assets such as gold costlier for investors holding other currencies.

On the technical front, "Gold is holding a narrow range ahead of the FOMC meeting results with support standing at just below $1,420 per ounce and more importantly at $1,410," INTL FCStone analyst Rhona O'Connell said in a note.

Meanwhile, investors will also keep a close eye on US-China trade talks in Shanghai this week.

Officials from both the countries restarted negotiations, after talks stalled in May, in a bid to end a year-long tit-for-tat tariffs war. Expectations of a breakthrough are low.

Reflecting investors' appetite for bullion, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.8% to 824.89 tonnes on Monday.

Holdings have risen for the second straight month, gaining nearly 4% so far in July.

Among other precious metals, silver rose 0.5% to $16.53 per ounce, while platinum fell 1.2% to $868.17 per ounce.