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Gold hits 4-month low ahead of Fed meeting

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Gold fell to a four-month low on Tuesday on investor jitters ahead of a Federal Reserve policy meeting that may offer further clues to support expectations of a mid-2015 rise in U.S. interest rates.

Spot gold fell as low as $1,142.86 an ounce in earlier trade, its lowest since Nov. 7, and was down 0.6 percent at $1,147 an ounce.

U.S. gold futures for April delivery settled down $5 at $1,148.20 an ounce.

Fed policymakers will start their two-day meeting later on Tuesday, and many analysts expected them to remove a "patient" reference to rate rises from their policy statement. That would put them a step closer to their first hike since 2006.

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"We do you expect gold to fall further if the Fed removes the word 'patient' from their statement and the trading action could be very volatile for investors," online broker AvaTrade chief market analyst Naeem Aslam said.

"The low for gold could be (around) $1,058."

Fed Meeting

Higher interest rates could dent demand for assets such as bullion that do not pay any interest.

"I still expect some negative reaction but maybe we are 90 percent there for that one and the attention will start to move on how fast rates will be increased," Macquarie analyst Matthew Turner said.

The metal failed to capitalize on a lower dollar, down 0.2 percent against a basket of currencies, mostly steadying after its biggest drop in more than a month on Monday.

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The U.S. currency, which has risen around 10 percent so far this year, was still trading close to its highest since 2003.

Investor sentiment towards gold continued to be bearish. ETF Securities, an operator of gold-backed exchange-traded products, said its long gold funds saw the largest weekly outflows since inception last week.

Danny Laidler, the head of the firm's Australia and New Zealand operations, said more than $376 million of funds exited last week.

Platinum tumbled to a near 6-year low on Tuesday as a stronger dollar, weaker gold prices and improving supply took a toll on prices.

Prices fell to their lowest since May 2009 at $1,084.50 an ounce in earlier trade, before recovering slightly to trade 0.8 percent down at $1,095.96. The metal has fallen more than 8 percent since the start of the year and was trading at a discount of about $50 an ounce to gold - the widest spread since March 2013.