* Federal Open Market Committee policy statement due at 1800 GMT
* Dollar ticks up on yen slide, keeping a lid on gold
* Palladium slips after touching fresh nine-month highs on Tuesday (Updates throughout, changes dateline, pvs BENGALURU)
By Jan Harvey
LONDON, July 27 (Reuters) - Gold steadied near $1,320 an ounce on Wednesday as traders awaited the outcome of a two-day Federal Reserve policy meeting later, which will be closely watched for any clues on the scale and pace of interest rate hikes this year.
Spot gold XAU= was at $1,320.12 an ounce at 0930 GMT, little changed from $1,319.84 late on Tuesday. U.S. gold futures GCv1 for August delivery were down 10 cents at $1,320.70.
The Fed is expected to leave rates unchanged at this meeting, but its policy statement, due after European markets close, is predicted to sound a more positive note on the economy that may boost expectations for a rate rise later this year.
Gold is particularly sensitive to rising U.S. rates, which would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
"Our economists are expecting a rate hike in December, but if the Fed starts to sound hawkish now, that could weigh on gold," UBS analyst Joni Teves said. "There are downside risks here."
The dollar rose against a basket of currencies, as reports of a larger than previously expected fiscal stimulus plan for Japan knocked the yen lower. Forex traders are also gearing up for a Bank of Japan policy meeting later this week. FRX/
Federal Reserve policymakers are looking for more evidence of a pick-up in inflation before moving on rates, analysts said, as they try to square a string of upbeat U.S. data with a global growth slowdown and other headwinds. over the path of U.S. rates has eroded nearly 50 percent of the gains gold has made since UK voters shocked the markets by voting last month to leave the European Union. The metal hit a more than two-year high of $1,374.71 an ounce after the move.
"Gold's insurance benefits come at a price on these levels," Julius Baer said in a note. "While Brexit-related uncertainty should be supportive for prices in the short term, the market appears too complacent with U.S. monetary policy."
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD , fell by another 4.5 tonnes on Tuesday to 954.24 tonnes. It has seen an outflow of nearly 28 tonnes in the last three weeks. GOL/ETF
Among other precious metals, palladium XPD= , which hit a nine-month high of $694.30 on Tuesday, was down 0.2 percent at $685.73 an ounce.
Silver XAG= was down 0.2 percent at $19.59, while platinum XPT= was up 0.2 percent at $1,093.90 an ounce.