By Zandi Shabalala
LONDON (Reuters) - Gold edged lower on Wednesday on a stronger dollar as the market waited for the result of a Federal Reserve meeting later in the day, expected to provide more signals on the direction of U.S. monetary policy.
Spot gold fell 0.5 percent lower to $1,217.17 per ounce by 1503 GMT, close to a one-year low of $1,211.08 reached on July 19.
U.S. gold futures were 0.6 percent lower at $1,225.90 an ounce.
The Fed is expected to keep rates unchanged, but solid economic growth combined with rising inflation is likely to keep it on track for another two hikes this year, sapping demand for non-interest-paying gold.
"People are waiting to understand what is going to happen with the Fed later but there are no signals of recovery at all for gold," said ActivTrades chief analyst Carlo Alberto De Casa, who said bullion remained in a bearish trend.
"The most important thing that gold is that it's looking at two rate increases this year which is adding pressure on gold, making the scenario weak for bullion."
A key support area in the short term is around $1,211-$1,215 per ounce, De Casa said, with gold having failed to rise above $1,235.
The U.S. dollar, in which gold is priced, rose against a basket of leading currencies after a source familiar with the Trump administration's plans said the White House was about to propose higher tariffs on $200 billion in Chinese imports.
Gold, which is usually used as a hedge against risk, bounced on the news on Tuesday to $1,228 but lost steam as the dollar advanced.
"The trade tensions are also fuelling safe-haven flows into the dollar. The U.S. currency still appears to be the preferred safe haven rather than gold," OCBC analyst Barnabas Gan said.
"Bullion is falling every time the US Dollar is strengthening, but it's unable to recover when the greenback loses ground, confirming that there's little investor appetite for gold in this phase," ActivTrades' De Casa said.
Meanwhile, trade tensions also pushed world stocks lower as investors feared a trade war between Washington and Beijing could hit global growth.
Hedge funds and money managers increased their net short position in COMEX gold contracts to a record in the week to July 24, U.S. Commodity Futures Trading Commission data showed on Friday.
In other precious metals, silver declined 0.8 percent to $15.40 an ounce. Platinum lost 2.5 percent to $813.20 an ounce and palladium slipped 1.5 percent to $915.20 an ounce.
(Additional reporting by Apeksha Nair in Bengaluru. Editing by Jane Merriman and Louise Heavens)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)