* Asian stocks, dollar fall
* HSBC expects gold to hit $1,300 on dovish Fed, soft dollar
* Fed's two-day policy meet begins later in the session
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, April 26 (Reuters) - Gold reversed early gains on
Tuesday, dropping despite a decline in dollar and equities, as
investors remained cautious ahead of policy meetings this week
at the Bank of Japan and the U.S. Federal Reserve.
The U.S. dollar fell versus the yen as traders took profits
from the greenback's recent rally against the Japanese currency.
Expectations of a dovish Fed also hurt the dollar. Asian stocks
retreated as investors were wary of riskier assets ahead of the
central bank meetings. MKTS/GLOB
Spot gold XAU= eased 0.3 percent to $1,234.16 per ounce by
0653 GMT, after gaining 0.3 percent earlier in the session.
"The metal continues to be influenced to a large extent by
dollar movements," said HSBC analyst James Steel, adding that he
expects gold to reach $1,300 this year.
"As well as a weaker dollar, we see global risks and a
modest recovery in oil prices as gold-bullish. The more tame Fed
tightening cycle, compared to expectations last year, should
also support gold," Steel said.
MKS Group trader Sam Laughlin said support around $1,230
should keep gold buoyant, though gains will be limited by the
Fed announcement on Wednesday.
Speculation of further easing sent the yen reeling against
the dollar late last week, but uncertainty over whether the BOJ
will actually deliver fresh stimulus at its April 27-28 meeting
saw the Japanese currency recovering some ground. USD/
The Fed also holds a policy meeting this week, with the
two-day gathering kicking off on Tuesday. The U.S. central bank
is not expected to raise interest rates at the meeting, but
markets will be looking for its take on the global economy and
its monetary policy outlook.
Economists expect the Fed to deliver a rate hike in June,
and follow up with another by year-end. But interest rate
futures show less conviction, underscoring an ongoing wide gap
between markets and policymakers on the trajectory of rates.
Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
while boosting the dollar.
Assets in SPDR Gold Trust, the largest gold-backed
exchange-traded fund, fell 0.3 percent to 802.65 tonnes on
Monday, though remained not too far off a two-year high reached
earlier this year. GOL/ETF
PRICES AT 0653 GMT
Metal Last Change Pct chg
Spot gold 1234.16 -3.34 -0.27
Spot silver 16.923 -0.066 -0.39
Spot platinum 1005.2 -6.3 -0.62
Spot palladium 596.75 -4.25 -0.71
Comex gold 1236 -4.2 -0.34
Comex silver 16.93 -0.079 -0.46
COMEX gold and silver contracts show the most
active months