* U.S. Fed starts two-day policy meeting
* World stock indexes, dollar edge up ahead of Fed statement
* Coming up: Fed statement at 2 p.m. EDT Wednesday
* GRAPHIC-2016 asset returns: reut.rs/1WAiOSC
(Updates prices; adds comment, second byline, NEW YORK
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, Sept 20 Gold steadied on
Tuesday as Federal Reserve policy makers began a two-day meeting
that investors are betting will leave interest rates unchanged.
Spot gold was up 0.1 percent at $1,314.54 an ounce by
3:02 p.m. EDT (1902 GMT), while U.S. gold futures were
little changed, having settled up 0.03 percent at $1,318.20 per
"We are back in this pattern where the expectations about
the next rate hike determine the short-term swings - when they
are pushed backwards, gold rises and when they are pulled
forward gold declines," Julius Baer analyst Carsten Menke said.
"The Fed will prepare markets for a rate hike, possibly in
March next year, expectation of which will be positive for the
dollar and in turn negative for gold."
Investors awaited the Fed's post-meeting statement scheduled
for release at 2 p.m. EDT Wednesday with Fed Chair Janet
Yellen's news conference to follow, when investors will watch
for any hint that the central bank could raise rates before the
end of the year.
Fed policymakers are set to again cut their forecasts for
how high interest rates will need to go in an economy where
output, productivity and inflation are growing at a slower pace
than in past decades.
Only a 12 percent chance of a rate rise this week is priced
in now, compared with 24 percent last week, CME FedWatch said.
Rising U.S. interest rates increase the opportunity cost of
holding non-yielding bullion and boost the dollar, making gold
more expensive for buyers holding other currencies.
World stock indexes and the dollar edged up as investors
awaited the outcomes of not only the Fed's policy meeting but
also that of the Bank of Japan, set to conclude during Asian
trading hours on Wednesday.
"From a technical point of view, the short-term outlook for
precious metals has somewhat worsened," said Capital Economics
in a note.
"Indeed, the prices of all metals have now fallen below
their 50-day moving averages, albeit still trading above their
200-day moving averages."
In other news, Swiss gold imports from Hong Kong last month
hit their highest since records began in 2012, while combined
shipments to Hong Kong and China hit their lowest since April,
data from the Swiss customs bureau showed.
Spot silver rose 0.3 percent to $19.20 an ounce,
after a near 2 percent increase in the previous session.
Platinum was up 0.8 percent at $1,028.90 and
palladium fell 0.1 percent at $682.10.
(Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; Editing by Louise Heavens and Chizu Nomiyama)