* Traders cautious ahead of Fed policy meeting
* Stock markets retreat as risk appetite wilts
* Chinese imports from Hong Kong surge in September
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 27 (Reuters) - Gold firmed on Tuesday, as caution ahead of a Federal Reserve meeting starting later in the day weighed on risk appetite and the dollar eased, but moves were muted as buyers awaited clues on the timing of a possible U.S. interest rate hike.
Spot goldwas up 0.3 percent at $1,165.91 an ounce at 1032 GMT, while U.S. gold futures for December delivery were down 20 cents an ounce at $1,166.10.
Prices hit their highest since June earlier this month after a run of downbeat U.S. data pushed back expectations for a rate hike, but have retreated from that level on expectations the Fed remains on a tightening course
Rising U.S. interest rates would likely weigh on gold, as they increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
"Investors' positions have been aligned with the new positioning of the Fed, and that is it for the moment, unless they become more dovish," Julius Baer analyst Carsten Menke said.
"Unless the Fed says it is going to reverse course, that it's not going to tighten but to loosen because the U.S. economy is so weak - which nobody expects - gold shouldn't move above $1,200 on a sustainable basis."
The dollar eased 0.1 percent against a currency basket on Tuesday, with the safe-haven yen gaining as investors turned risk-averse ahead of the Fed's two-day meeting.
The U.S. central bank is widely expected to leave rates unchanged and investors are increasingly sceptical it will raise rates before the end of the year.
"Gold is receiving some oxygen from the investor uncertainty generated by the perceived divisions at the Fed," HSBC said in a note. "The longer the uncertainty goes on, the more investors may turn to gold."
In an industry report on Tuesday, GFMS analysts at Thomson Reuters said gold is set to remain under pressure until there is more clarity on U.S. rates.
Surging demand for coins and bars and a rise in buying by central banks pushed physical gold demand up 7 percent in the third quarter, the report showed, though the market remained in a surplus of 51 tonnes.
China's net gold imports from main conduit Hong Kong jumped to a 10-month high in September, data showed on Tuesday. Net gold imports from Hong Kong rose to 97.242 tonnes last month, their highest since November 2014.
Among other precious metals, silver was up 0.3 percent at $15.88 an ounce, while platinum was down 0.6 percent at $987.90 an ounce, and palladium was down 0.3 percent at $677.15 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Holmes) ((jan.harvey@thomsonreuters.com)(+44)(0)(207 542 7744)(Reuters Messaging: jan.harvey.thomsonreuters.com@reuters.net))
* Stock markets retreat as risk appetite wilts
* Chinese imports from Hong Kong surge in September
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 27 (Reuters) - Gold firmed on Tuesday, as caution ahead of a Federal Reserve meeting starting later in the day weighed on risk appetite and the dollar eased, but moves were muted as buyers awaited clues on the timing of a possible U.S. interest rate hike.
Spot goldwas up 0.3 percent at $1,165.91 an ounce at 1032 GMT, while U.S. gold futures for December delivery were down 20 cents an ounce at $1,166.10.
Prices hit their highest since June earlier this month after a run of downbeat U.S. data pushed back expectations for a rate hike, but have retreated from that level on expectations the Fed remains on a tightening course
Rising U.S. interest rates would likely weigh on gold, as they increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
"Investors' positions have been aligned with the new positioning of the Fed, and that is it for the moment, unless they become more dovish," Julius Baer analyst Carsten Menke said.
"Unless the Fed says it is going to reverse course, that it's not going to tighten but to loosen because the U.S. economy is so weak - which nobody expects - gold shouldn't move above $1,200 on a sustainable basis."
The dollar eased 0.1 percent against a currency basket on Tuesday, with the safe-haven yen gaining as investors turned risk-averse ahead of the Fed's two-day meeting.
The U.S. central bank is widely expected to leave rates unchanged and investors are increasingly sceptical it will raise rates before the end of the year.
"Gold is receiving some oxygen from the investor uncertainty generated by the perceived divisions at the Fed," HSBC said in a note. "The longer the uncertainty goes on, the more investors may turn to gold."
In an industry report on Tuesday, GFMS analysts at Thomson Reuters said gold is set to remain under pressure until there is more clarity on U.S. rates.
Surging demand for coins and bars and a rise in buying by central banks pushed physical gold demand up 7 percent in the third quarter, the report showed, though the market remained in a surplus of 51 tonnes.
China's net gold imports from main conduit Hong Kong jumped to a 10-month high in September, data showed on Tuesday. Net gold imports from Hong Kong rose to 97.242 tonnes last month, their highest since November 2014.
Among other precious metals, silver was up 0.3 percent at $15.88 an ounce, while platinum was down 0.6 percent at $987.90 an ounce, and palladium was down 0.3 percent at $677.15 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Holmes) ((jan.harvey@thomsonreuters.com)(+44)(0)(207 542 7744)(Reuters Messaging: jan.harvey.thomsonreuters.com@reuters.net))
