* As gold breaks $1,700, recovery likely to continue -analyst * Fed statement due at 1800 GMT on Wednesday * Palladium down 30% from February's record peak (Updates prices) By K. Sathya Narayanan June 9 (Reuters) - Gold prices rose on Tuesday as a pullback in equities increased the appeal of the safe-haven metal while investors awaited the U.S. Federal Reserve's two-day monetary policy meeting starting later in the day. Spot gold gained 0.7% to $1,705.77 an ounce by 1150 GMT, climbing for a second straight session. U.S. gold futures rose 0.6% to $1,715.50. "Stock markets aren't rising any further, or at least not meaningfully, and that is taking pressure away from gold," said Commerzbank analyst Daniel Briesemann. European shares eased as declines in British American Tobacco and banking stocks halted a rally driven by hopes of economic recovery. "We are seeing a temporary return of risk-off ... gold is gaining strength as liquidity flows back into bullion markets despite the recovery of the greenback," ActivTrades chief analyst Carlo Alberto De Casa said in a note. As gold has broken through the resistance level of $1,700, recovery seems likely to continue if there are further declines on stocks, De Casa added. Gold prices fell last Friday to $1,670.14, their weakest in more than a month after an unexpected jump in U.S. employment numbers signalled that an economic recovery was under way. Traders have stopped pricing in the possibility of negative interest rates in the United States and are now focused on the Fed's monetary policy meeting for guidance on how the world's biggest economy can recover after the coronavirus. In other precious metals, silver dropped 1.6% to $17.58 an ounce while platinum slipped 0.9% to $824.87. Palladium fell 3.1% to $1,961.10, with prices of the metal used in autocatalysts now down more than 30% from a record peak in late February. "The (palladium) market could be more or less balanced due to the very low demand from the automotive industry, and that is probably keeping a check on prices," Commerzbank's Briesemann said. (Reporting by K. Sathya Narayanan in Bengaluru Additional reporting by Swati Verma and Eileen Soreng Editing by Susan Fenton and David Goodman)
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