PRECIOUS-Gold steadies ahead of U.S. data, monitors Syria crisis
* Dollar index at 1-month high on Fed tapering expectations
Markets watch U.S. decision on Syrian action
* Coming up: U.S. ISM Manufacturing PMI Aug at 1400 GMT
(Updates throughout, changes dateline from SINGAPORE)
By Clara Denina
LONDON, Sept 3 (Reuters) - Gold was little changed on Tuesday, as investors held off doing business before U.S. economic data that is expected to provide clues on the Federal Reserve's policy moves, while uncertainty remains around a possible strike on Syria by the United States.
The metal rose to a 3-1/2 month high of $1,433.31 an ounce on Wednesday when a U.S. strike on Syria seemed imminent. But safe-haven demand started to abate after U.S. President Barack Obama decided to seek congressional approval and the UK parliament rejected British participation in any military action.
"It is difficult to predict development in the geopolitical situation, but obviously this will be followed by the gold market and if we have a massive crisis prices will rise on the back of it," Standard Chartered analyst Daniel Smith said.
Spot gold was down 0.1 percent at $1,393.20 an ounce by 1101 GMT, while U.S. gold futures for December fell $2.70 to $1,393.40.
The metal hit a one-week low of $1,374.10 in the previous session, but regained some ground on Tuesday, also helped by stronger crude oil prices. The positive correlation between gold and oil has risen in the past few sessions as gold is seen as a hedge against oil-led inflationary pressures.
Prices were, however, kept in check by a stronger dollar , which hit a one-month high against a basket of currencies.
Many economists expect the U.S. Federal Reserve to decide whether to begin tapering its commodity-friendly stimulus measures at its two-day policy meeting starting on Sept. 17.
A scaling back would hurt prices, which have been boosted by central bank liquidity over the past four years.
Investors are scrutinising economic data to gauge the strength of economic recovery and predict when the Fed is likely to start curbing its $85 billion per month bond-buying programme.
The focus will be on major central bank meetings later in the week and a series of crucial U.S. economic data, culminating in the most important, the payrolls report, on Friday.
On Tuesday, market participants will monitor the U.S. Institute of Supply Management to publish its bellwether PMI for U.S. factories.
"Any data out of the United States this week is going to be pretty critical to the outlook of gold and we are expecting a strong labour report, which encourages the idea of QE tapering," Standard Chartered's Smith said.
In South Africa, the National Union of Mineworkers (NUM), which represents about two-thirds of more than 120,000 unionised gold miners in the country, is set to start a strike for higher pay later on Tuesday, although President Jacob Zuma appealed to unions to avoid it.
The shutdown could cost South Africa more than $35 million a day in lost output, but the impact on gold prices seems muted for now.
"At least psychologically, the forthcoming strikes in the South African gold mining industry - announced for today by the biggest union of mine workers - should also be lending some support," Commerzbank said.
"That said, we currently believe that gold's short-term potential has been fully exploited for now."
Silver was unchanged at $24.15 an ounce. Spot platinum rose 0.6 percent to $1,523 an ounce, while spot palladium was up 0.7 percent at $717.22 an ounce.
(Additional reporting by A. Ananthalakshmi in SINGAPORE; editing by James Jukwey)