(Corrects day of the week in the first paragraph to Tuesday (from Thursday))
* Dollar index steady ahead of Fed policy meeting
* Spot gold biased to fall into $1,206-$1,214 range - techs
By Maytaal Angel
LONDON, July 31 (Reuters) - Gold slipped on Tuesday, heading for a fourth consecutive month of losses, as a stronger dollar and rising U.S. interest rates continue to weigh, pushing speculators to hold record short or sell positions.
The dollar was flat versus a currency basket, following a three month streak of gains, with the U.S. Federal Reserve set to reaffirm the outlook for further gradual rate rises at the end of its two-day rate review through Wednesday. FRX/
The U.S. central bank has raised benchmark lending rates twice this year and signalled two more increases by year's end.
Higher rates tend to boost the dollar, making dollar-priced gold more expensive for holders of other currencies.
"The increase in U.S. interest rates so far has undermined a number of emerging market currencies. This general instability is seen as deflationary, and doubtless has encouraged (gold) speculators to take record short positions," said Alasdair Macleod, head of research at GoldMoney.com.
Spot gold XAU= fell 0.3 percent at $1,218.2 an ounce at 1037 GMT, heading for a fourth monthly decline that would mark its longest losing streak since 2013.
U.S. gold futures GCcv1 were 0.4 percent lower at $1,216.80.70 an ounce.
Hedge funds and money managers net short positions in COMEX gold stood at 27,156 contracts in the week to July 24, U.S. Commodity Futures Trading Commission data showed on Friday, the biggest on records dating back to 2006. the wider markets, world stocks are set to end July with the best monthly returns since January, despite trade tensions, growth fears and a widespread sell off in the global tech sector. MKTS/GLOB
Rising equities tend to indicate investor appetite for risky assets as opposed to traditional safe havens like gold.
"As the US economy continues to do well and the perceived threat to the economy from the trade tensions appears low, we believe there is little incentive for U.S. investors to enter the gold market at the current point in time," said Julius Baer in a note.
"Investors remain absent. Stronger demand from China is offset by weaker demand elsewhere. We stick to our short-term neutral view as the market lacks a trigger for an imminent upward or downward move."
Spot gold is biased to fall into a range of $1,206-$1,214 per ounce, according to Reuters technicals analyst Wang Tao. other precious metals, silver XAG= slipped 0.4 percent at $15.42 an ounce, platinum XPT= rose 0.5 percent to $823.55 and palladium XPD= fell 0.4 percent to $925.20.