Gold slips as Fed meeting looms, but set for third monthly gain

By Brijesh Patel

(Reuters) - Gold prices slipped more than 1% to a one-week low on Tuesday due to an uptick in the dollar and U.S. Treasury yields, although strong safe-haven demand and central bank buying kept bullion on track for its third consecutive monthly gain.

Spot gold fell 1.7% to $2,294.84 per ounce, as of 1:56 p.m. ET (1756 GMT).

U.S. gold futures settled 2.3% lower to $2,302.9.

Gold prices have gained 2.8% so far this month after hitting a record high of $2,431.29 earlier in April.

The dollar rose 0.3% against its rivals, making gold more expensive for other currency holders, while benchmark 10-year yield also climbed. [USD/]

"A lot of traders have a lot of profit locked up in gold and silver, and they're willing to get to the sidelines into the Fed announcement," said Bob Haberkorn, senior market strategist at RJO Futures.

"However, there's been a lot of Asian demand and strong central bank demand. We had flight to safety the last two years. So gold market is definitely in a bullish position right now and it will continue to move forward for the remainder of the year."

The U.S. central bank begins its two-day monetary policy meeting on Tuesday, where it is expected to hold rates at 5.25%-5.5%. All eyes are on Fed Chair Jerome Powell's speech on Wednesday for more cues on rate-cut projections.

Traders have pared back bets of Fed rate cuts this year due to recent hotter-than-expected U.S. economic data and sticky inflation.

Powell's stance may be strongly hawkish, pushing expectations of a first rate cut to the fourth quarter or even to next year - this scenario would bode badly for gold, said Ricardo Evangelista, senior analyst, ActivTrades.

Meanwhile, spot palladium dropped 2% to a near two-month low of $953.32 per ounce, while sister metal platinum, was down 1.2% at $936.18.

Spot silver fell 2.7% to $26.40 per ounce.

(Reporting by Brijesh Patel in Bengaluru, additional reporting by Ashitha Shivaprasad; Editing by Krishna Chandra Eluri)