* Gold hits lowest since March 2 at $1,225.70 an ounce
* Longs unwind positions before outcome of Fed policy meet
* Coming up: Fed statement Wednesday at 1800 GMT (Adds comment, byline, NEW YORK dateline; updates prices)
NEW YORK/LONDON, March 15 (Reuters) - Gold fell to its lowest in almost two weeks on Tuesday ahead of a Federal Reserve statement that is expected to give clues on the pace of future U.S. rate rises.
Spot gold fell to $1,225.70 an ounce, its lowest since March 2, at one point and was down 0.4 percent at $1,230.31 by 2:37 p.m. EDT (1837 GMT). U.S. gold futures for April delivery settled down 1.1 percent at $1,231 an ounce.
Worries about global growth and financial instability had led investors to reprice prospects for increases in U.S. rates, sending safe-haven gold to a 13-month high last week. But solid U.S. data readings more recently have rekindled market expectations of further tightening this year.
The Fed began its two-day meeting on Tuesday and the market was awaiting a statement from the central bank at 2 p.m. EDT on Wednesday.
“One difference from a few weeks ago is that the surprise (from the Fed) would be a rate hike, whereas perhaps a few weeks ago people thought a surprise would be a rate cut,” Macquarie analyst Matthew Turner said.
“There has been a shift towards hawkishness again, which is probably pressuring gold a little bit.”
Further U.S. rate rises could lift the opportunity cost of holding non-yielding bullion.
“It’s position squaring ahead of the Fed because there’s a little bit of uncertainty here,” said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, referring to the source of pressure in the bullion market.
“It’s a little bit concerning that the dollar is soft, equities are soft and gold is soft as well, so the market’s probably putting too much weight on the (Fed) meeting.”
The Fed is expected to leave short-term interest rates unchanged but also signal that a rate hike is not too far off as long as the job market and inflation continue to improve.
The dollar was flat against a basket of main currencies, having fallen versus the yen after the Bank of Japan held policy steady as expected.
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.08 percent on Monday.
“There have been huge inflows into ETFs since the beginning of the year but you started to see a fall in the past few days as prices slightly retreated,” Natixis analyst Bernard Dahdah said.
Spot silver fell 0.4 percent to $15.25 an ounce, platinum was up 0.5 percent at $956.30 and palladium was down 0.1 percent at $566.75. (Additional reporting by Naveen Thukral in Singapore; Editing by Keith Weir and Meredith Mazzilli)
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