* Palladium off record high hit on Monday
* $1,480 a key support level for gold -analysts (Updates prices)
By Brijesh Patel
Sept 17 (Reuters) - Gold prices were steady on Tuesday as investors adopted a wait-and-see approach ahead of the U.S. Federal Reserve’s two-day monetary policy meeting, when the central bank is widely expected to cut interest rates.
Spot gold was mostly unchanged at $1,498.64 per ounce as of 1110 GMT.
Gold prices rose more than 1% early Monday before settling 0.6% up for the day after a weekend attack on oil facilities in Saudi Arabia inflamed worries over stability in the Middle East.
U.S. gold futures were down 0.3% at $1,506.70 an ounce.
“The market is relatively stable, there is so much (interest) pointed towards the Fed meeting tomorrow, it seems like traders have taken a little bit of a pause,” said OANDA senior market analyst Craig Erlam.
“Gold got a bit of a bounce yesterday from the geopolitical (fallout) from the attacks, but it didn’t even break the $1,520 level on the news, which suggests that gold is a little vulnerable, with $1,480 being the key support level.”
The Federal Open Market Committee (FOMC) is widely expected to cut interest rates at its two-day meeting starting later in the day. It would be the central bank’s second such cut after lowering rates in July for the first time since the financial crisis.
The expected decision from the Fed could put pressure on the Bank of Japan to ease policy at a meeting due on Thursday.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
However, the dollar index held on to Monday’s gains to stand at 98.645.
Gold prices have climbed nearly 18%, or more than $200, since touching a 2019 low of $1,265.85 in early May, driven by a dovish outlook from major central banks, escalation in the U.S.-China trade war and Middle East tensions.
Attacks on Saudi Arabia’s main oil refinery over the weekend have also entered the equation, prompting U.S. President Donald Trump to apply more pressure on the Fed to lower rates.
“It appears conviction remains positive so long as gold hangs around $1,500,” AxiTrader strategist Stephen Innes said in a note, adding that the market has been caught between hedging against a possible U.S. military response on Iran and position-squaring ahead of the Fed’s meeting.
Elsewhere, silver edged 0.1% lower to $17.83 an ounce and platinum eased 0.1% to $936.19.
Palladium slipped 0.7% to $1,593.80 after touching a record high of $1,626.81 in the previous session. (Reporting by Brijesh Patel in Bengaluru Editing by David Goodman and Louise Heavens)