BENGALURU, Aug 2 (Reuters) - Gold inched higher in early trade on Thursday, recovering from its fall in the previous session when the U.S. Federal Reserve kept interest rates steady, as the dollar held steady.
FUNDAMENTALS
* Spot gold XAU= was up 0.2 percent at $1,218.22 an ounce at 0052 GMT, after losing 0.65 percent in the previous session.
* U.S. gold futures GCcv1 were, however, 0.1 percent lower at $1,226.80 an ounce.
* The dollar index .DXY , which measures the greenback against a basket of six major currencies, was unchanged at 94.641.
* The U.S. Federal Reserve kept interest rates unchanged on Wednesday as expected but characterized the economy as strong, keeping the central bank on track to increase borrowing costs in September. U.S. short-term interest rates futures were little changed on Wednesday as traders stuck to the view that the Federal Reserve would raise key borrowing costs two more times in 2018 with the next rate hike seen happening at its Sept. 25-26 policy meeting. The Bank of England looks set to raise interest rates on Thursday to their highest level since the financial crisis almost a decade ago, defying warnings that it is taking a gamble ahead of Brexit, the terms of which remain unclear. U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports, his administration said on Wednesday. China's central bank will fine-tune monetary policy in a "pre-emptive" way to ensure liquidity is reasonably ample, it said on Wednesday, amid heightened trade tension that has stiffened economic headwinds. The United States believes Iran is preparing to carry out a major exercise in the Gulf in the coming days, apparently moving up the timing of annual drills amid heightened tensions with Washington, U.S. officials told Reuters on Wednesday. SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.40 percent to 796.96 tonnes on Wednesday from 800.20 tonnes on Tuesday. Barrick Gold Corp ABX.TO will make a bigger push to attract institutional investors in China under a new deeper-ties pact with Shandong Gold 600547.SS , aimed at bolstering its shareholder base, executives told Reuters. AHEAD (GMT)
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