* Fed kicks off policy meeting on Wednesday
* Stocks edge higher, dollar rises
* GRAPHIC: Asset returns-http://link.reuters.com/dub25t
* COMING UP: Fed statement Thursday at 1800 GMT
(Updates prices; adds comment, second byline, NEW YORK
dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, Sept 15 (Reuters) - Gold eased back toward
last week's one-month low on Tuesday as U.S. retail sales data
lifted the dollar index, and as caution ahead of this week's
Federal Reserve announcement on interest rates kept buyers on
the sidelines.
The Fed meets on Wednesday and Thursday to discuss the
timing of the first U.S. rate increase in nearly a decade, which
could hurt gold prices. Rock-bottom rates pressure the dollar
and cut the opportunity cost of holding non-yielding bullion.
Speculation that a rate rise could come as early as this
month has helped knock gold down 6 percent this year, but
turbulence in the wider markets and fears of a slowdown in China
have called the timing of the move into question.
"It's drifting on lack of real interest ahead of the Fed,"
said James Steel, chief metals analyst for HSBC Securities in
New York, adding that the strong dollar also pressured prices.
Spot gold XAU= was down 0.5 percent at $1,103.20 an ounce
at 2:55 p.m. EDT (1855 GMT), near Friday's one-month low of
$1,098.35. U.S. gold futures GCv1 for December delivery
settled down 0.5 percent at $1,102.60 an ounce.
Spot silver XAG= was down 0.6 percent at $14.32 an ounce.
"This is a consolidation," said ING's head of commodity
strategy, Hamza Khans. "People got long fundamentally, and are
now taking profits off the table until they see how much
volatility the dollar will introduce to the market."
The U.S. dollar .DXY turned positive against a basket of
major currencies as growth in domestic retail sales last month
signaled solid consumer spending in the third quarter, which
might encourage the Fed to lift interest rates on Thursday.
FRX/
A small majority of forecasters are sticking to their guns
and predicting the Fed will pull the trigger this week.
ID:nL1N11H1B3
Stock markets edged up on Wall Street and Europe, while
10-year U.S. Treasury yields US10YT=RR rose to a six-week
high. MKTS/GLOB
"The whole world is talking about the meeting on Thursday,"
MKS' head of trading, Afshin Nabavi, said. "We started at a 75
percent chance (of an increase this month), and now I've heard
25 percent. There is a lot of talk about next March, but we'll
have to wait and see."
Industrial precious metals were buoyed by copper prices that
rallied on late short-covering despite demand concerns in top
consumer China. MET/L
Spot platinum XPT= was up 0.5 percent at $957 an ounce and
palladium XPD= was up 2.4 percent at $600 an ounce.