* Prices trapped in tight range
* Traders await cues from Fed on U.S. rates
* Fed's two-day policy meet begins on Wednesday
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Sept 16 (Reuters) - Gold struggled to break out
of a tight range near a one-month low on Wednesday, as investors
waited to hear the outlook for U.S. interest rates from a
Federal Reserve policy meeting that kicks off later in the
session.
Spot gold was little changed at $1,105.10 an ounce by
0629 GMT. Prices for the metal have been steady this week,
following a drop to a one-month low of $1,098.35 the week
before, with any big moves expected only after the Fed statement
on Thursday.
Expectations the central bank will hike rates at the two-day
policy meeting have eased recently due to concerns over slowing
economic growth in China and volatility in financial markets,
but bullion traders still remained cautious.
"We could see some upside in (gold) prices if the Fed
chooses to not raise rates," said a trader in Hong Kong. "But I
doubt we will be able to hold onto the gains for long because
the rate hike is going to come at some point this year."
The uncertainty over the timing of a rate increase has
weighed on gold all year, sending it down over 6 percent - the
metal's third straight year of declines. Higher rates could dent
demand for non-interest-paying bullion, while boosting the
dollar.
Data on Tuesday showed U.S. consumer spending grew at a
fairly healthy pace over the past two months, pointing to
underlying strength in domestic demand that could strengthen the
case for the Fed to hike interest rates on Thursday.
While other data showed continued weakness in manufacturing,
economists said that was unlikely to have much impact on the
U.S. central bank's decision.
Bullion did not receive much support from physical markets.
"The physical gold markets are quiet. Little near-term gold
demand is coming out of India but China's demand is moderately
good," HSBC analysts said in a note.
Prices in India were at a discount of about $5 an ounce to
the global benchmark due to sluggish demand, dealers said.
In China, however, prices were at a premium of about $5 an
ounce on the Shanghai Gold Exchange, indicating good buying
interest.
PRICES AT 0629 GMT
Metal Last Change Pct chg
Spot gold 1105.1 0.1 0.01
Spot silver 14.38 -0.01 -0.07
Spot platinum 956.5 -0.5 -0.05
Spot palladium 597.15 -2.35 -0.39
Comex gold 1104.6 2 0.18
Comex silver 14.355 0.029 0.2
Euro 1.1273
DXY 95.544
COMEX gold and silver contracts show the
most active months