* Gold has best month since Aug, up 2.8 pct in Jan
* Gold expected to break support at $1,335/oz -technicals
(Adds comment, updates prices) Jan 31 (Reuters) - Gold prices edged up on Wednesday after hitting a one-week low in the previous session, with the dollar falling against a basket of major rivals and traders awaiting the outcome of the U.S. Federal Reserve's two-day meeting.
Spot gold had risen 0.2 percent to $1,341.15 per
ounce by 0359 GM. In the previous session, it touched its lowest since Jan. 23 at $1,334.10 an ounce.
U.S. gold futures for February delivery rose 0.4
percent to $1,339.80 per ounce. "Yellen may deliver a hawkish surprise setting the stage for a possible policy pivot while trumpeting in the Powell era. Gold bears may take advantage of this move," said Stephen Innes, APAC trading head for OANDA. A rate hike in March would not come as a surprise, but any change in the pace of hikes would pose a risk to gold's rally, Innes noted. Gold prices have risen 2.8 percent so far in January, their best month since August, largely due to weakness in the dollar.
The dollar inched lower against a basket of major rivals on Wednesday, showing scant reaction to U.S. President Donald Trump's State of the Union address. The greenback failed to draw much support from higher Treasury yields as the risk-averse mood favored its peers like the yen. Traders also awaited U.S. jobs report on Friday that will include data on nonfarm payrolls and average hourly earnings. Spot gold is expected to break support at $1,335 per ounce and fall more towards the Jan. 18 low of $1,323.70, as suggested according to Reuters technical analyst Wang Tao.
In other precious metals, silver climbed 0.3-percent
higher to $17.17 per ounce after hitting a one-week low of $17.03 an ounce earlier in the session.
Palladium was up 0.3 percent at $1,057.45 per ounce,
after hitting a five-week low at $1,047.00 in the previous session.
Platinum gained 0.3 percent to $999.30 per ounce,
after falling for four straight sessions. It hit a one-week low the session before.
(Reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru; Editing by Richard Pullin and Joseph Radford)