PRECIOUS-Gold edges lower ahead of Fed meeting
* Fed policy meeting begins on Tuesday
* Central bank meetings, U.S. jobs data due this week
* Shanghai premiums fall to about $20/oz
(Updates prices, adds comment)
LONDON, July 30 (Reuters) - Gold edged lower on Tuesday as the dollar steadied and traders shied away from taking big bets ahead of a U.S. Federal Reserve meeting that may provide clues on the pace at which it cuts back on monetary stimulus.
The Fed starts a two-day policy meeting on Tuesday and is expected to release a statement on Wednesday afternoon. Markets are watching this for clues on when the U.S. central bank will start to taper or reduce its $85 billion monthly bond purchases.
Spot gold was down 0.6 percent to $1,318.54 an ounce by 1341 GMT, extending a drop on Monday that snapped three weeks of gains. U.S. gold futures for August fell $9.80 to $1,318.50 an ounce.
Prices regained the $1,300 level for the first time in a month last week, buoyed by remarks from Fed Chairman Ben Bernanke that a highly accommodative monetary policy would be needed for the foreseeable future and that any reduction in bond purchases was not set in stone and depended on the strength of the economy.
The Fed previously said it was likely to begin reducing its stimulus programme later in 2013 and halt it altogether by mid-2014, which strengthened the dollar, making assets priced in the greenback such as gold more expensive for foreign investors.
"We are going to see a lot of volatility this week as there is key economic data in the United States and the central banks' rate meetings," Standard Chartered analyst Dan Smith said.
The European Central Bank and the Bank of England also hold policy reviews this week.
"As I am relatively optimistic on the world, I'm tending to think that we are going to see some more positive macro surprises, which is potentially negative for gold in the short term," Smith said. "It is quite important that prices hold around $1,300/$1,302, but we might come down a bit lower."
The dollar inched above a five-week low on Monday against a basket of currencies but was lower against the euro after euro zone consumer sentiment data showed improvement in July and investors positioned for a soft second-quarter U.S. economic growth report on Wednesday.
Investors are also waiting for the influential U.S. jobs report for July due on Friday.
"If you see some more dovish comments from European central banks this week and a stronger employment number in the United States, you'll get some strengthening in the dollar and Treasury yields, which would be bad news for gold," Natixis analyst Nic Brown said.
ASIAN BUYING SLOWS
Gold jewellery demand in top buyer India ebbed and was seen as unlikely to gain traction until late August, when seasonal buying should pick up during the autumn wedding season and religious festivals.
Buying from China was also subdued, with prices on the Shanghai Gold Exchange falling to about $20 an ounce over London spot prices, compared with above $25 last week.
Silver fell 0.5 percent to $19.68 an ounce, almost $1 lower than a one-month high of $20.60 hit last week.
Platinum dropped 0.8 percent to $1,427.75 an ounce and palladium lost 2 percent to $727.22 an ounce.
(Editing by James Jukwey and Jane Baird)