PRECIOUS-Gold firms ahead of expected Fed interest rate cut

* SPDR Gold holdings rose 0.8% on Monday
* Spot gold remains neutral in $1,412-$1,427/oz range
-technicals
* Investors keep an eye on U.S.-China trade talks

(Updates prices)
By Karthika Suresh Namboothiri
July 30 (Reuters) - Gold prices firmed on Tuesday ahead of a
U.S. Federal Reserve meeting at which the central bank is
expected to signal how big an interest rate cut the world's
biggest economy could take.
Spot gold XAU= was up 0.1% at $1,428.61 an ounce by 1143
GMT and U.S. gold futures GCcv1 gained 0.6% to $1,428.60.
"The big question is what the tone of the Fed will be
tomorrow. Interest rates are overwhelmingly likely to be cut.
It's just a question of by how much," said Mitsubishi analyst
Jonathan Butler.
"Gold is still at six-year highs. Although it has been close
to $1,450 recently, it seems to have found a level around
$1,425."
Investors awaited cues on the Fed's two-day monetary policy
meeting, which begins later in the session and is expected to
result in a rate cut of 25 basis points. If implemented, it
would be the central bank's first cut to interest rates in a
decade.
The bank would be joining peers such as the European Central
Bank in signalling the need for rate cuts. The Bank of Japan has
also said it would ease "without hesitation" if the economy lost
momentum. Gains in the dollar index .DXY , which touched a two-month
high of 98.206, on the back of weaker sterling, helped to cap
the rise in bullion. USD/
"Liquidity is still thin as traders seem to be holding back
before the Fed gives its views on monetary policy," said Phillip
Futures analyst Benjamin Lu, adding that gold was being
pressured by a firm dollar.
U.S.-China trade negotiations, which begin in Shanghai on
Tuesday, were also in the spotlight, though expectations for
progress at the two-day meeting are low, with the markets hoping
the two sides can at least detail commitments for goodwill
gestures. On the technical side, spot gold remains neutral in a range
of $1,412-$1,427 an ounce and an escape could suggest a
direction, said Reuters technical analyst Wang Tao. Holdings of SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, rose 0.8% from Friday to
824.89 tonnes on Monday. GOL/ETF
Among other precious metals, silver XAG= rose 0.1% to
$16.47 while platinum XPT= was steady at $878.78.
Palladium XPD= dropped 0.6% to $1,543.54 after touching
its highest in nearly two weeks in the previous session.

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