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Commodities

Gold struggles ahead of Fed meet on U.S. rate hike views

SINGAPORE (Reuters) - Gold was hurting from overnight losses on Tuesday and the metal looked vulnerable to a drop back to multi-year lows on expectations of a U.S. rate hike later this week.

Gold rings are seen on display at a goldsmith shop in Kuala Lumpur April 21, 2011. REUTERS/Bazuki Muhammad

FUNDAMENTALS

* Spot gold ticked up 0.1 percent to $1,064.12 an ounce by 0037 GMT (7.37 p.m. EDT) , after a 1.1 percent slide on Monday. The price is only about $20 short of a near six-year low of $1,045.85 reached earlier this month.

* In its last policy meeting of the year that kicks off later on Tuesday, the Federal Reserve is widely expected to hike U.S. interest rates for the first time since June 2006.

* The U.S. central bank is expected to raise rates by a quarter of a percentage point at the end of its two-day meeting on Wednesday.

* Higher rates are expected to hurt demand for non-interest-paying bullion, while boosting the dollar.

* Gold has already slid 10 percent for the year, its third straight annual decline, in anticipation of higher rates. And traders and analysts expect further declines.

* Assets in the top gold exchange traded fund, SPDR Gold Trust, are at their lowest since September 2008.

* Gold wasn’t getting much support from the physical markets either.

* Gold prices in India swung to a discount for the first time in a month on Monday as jewellers and dealers in the world’s second-biggest consumer postponed purchases ahead of the Fed meeting.

* Among other precious metals, silver steadied at $13.71 an ounce after a six-day losing streak. It had dropped to $13.60 on Monday, its lowest since August 2009.

* For the top stories on metals and other news, click [TOP/MTL] or [GOL]

Reporting by A. Ananthalakshmi; Editing by Ed Davies

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