(Adds comments, updates prices)
* Palladium slips from record high hit on Monday
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl
By Swati Verma
BENGALURU, Dec 18 (Reuters) - Gold rose to a one-week high on Tuesday, helped by a weaker U.S. dollar and a fall in global stock markets, but moves were limited as investors sought clarity on the path of U.S. interest rates as concerns about a slowing global economy deepened.
Spot gold was up 0.1 percent at $1,247.06 per ounce at 1310 GMT, having earlier touched its highest since Dec. 10 at $1,250.27, just short of a five-month peak of $1,250.55 hit last week.
U.S. gold futures were steady at $1,251.30 per ounce.
“There has been a slight increase in the minority view that the Fed might not raise rates, given the recent weakness in the equity markets. It would be quite a shock if they didn’t increase rates in this week’s meeting,” said Capital Economics analyst Ross Strachan.
“Most of the attention will be on how many more interest rates rises there may be next year.”
The Fed is widely expected to raise interest rates for the fourth time this year at its two-day policy meeting ending on Wednesday. But weak stock markets and slowing global growth may prompt the central bank to signal a slowdown in rate increases.
“We have seen quite a broad-based sell-off across many other markets, from equities to other commodity markets, and an increase in risk aversion. In that climate, gold is edging gradually higher towards a multi-months peak,” Strachan said.
World stock markets tumbled as fears about a slowing global economy gripped investors, while the dollar index slipped 0.3 percent against a basket of major currencies.
Gold tends to gain when interest rate hike expectations ease because lower rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, in which it is priced.
In euro terms, gold reached its highest since June at 1,100.57 euro an ounce.
“While the budget dispute tensions between the European Union and Italy are easing ... France now appears to be becoming a worry,” Commerzbank analysts said in a note.
France’s budget deficit is likely to overshoot the European Union’s limit of 3 percent of GDP next year, Prime Minister Edouard Philippe told Les Echos newspaper in an interview earlier this week.
Gold, considered a safe investment during times of financial, economic and geopolitical uncertainty, has risen more than 7 percent from 19-month lows hit in mid-August. It is also set to post its biggest quarterly gains since March 2017.
“We feel there is still upside potential from here, particularly if stocks and the dollar remain under pressure,” traders at MKS PAMP said in a note.
Among other precious metals, silver was down 0.2 percent to $14.63, while platinum slipped 1 percent to $785.50 per ounce.
Spot palladium fell 1.2 percent to $1,242.99 per ounce, after touching a record high of $1,269.5 on Monday. (Reporting by Swati Verma in Bengaluru; Editing by Kirsten Donovan and David Evans)