* Fed seen raising rates, 2018 rate hike projections in focus
* Gold down 4 pct from over 1-1/2-year high touched in Jan
* Analysts see global political tensions supporting gold
(Adds comments, updates prices) March 21 (Reuters) - Gold prices rose on Wednesday as the dollar fell as investors await the outcome of the U.S. Federal Reserve's meeting this week for signs of the pace of monetary tightening, which could limit the demand for bullion going forward.
Spot gold rose 0.2 percent to $1,313.96 per ounce at
0336 GMT. Prices fell to a nearly three-week low in the previous session of $1,306.91.
U.S. gold futures for April delivery fell 0.1
percent to $1,313.80 per ounce.
The dollar index , which measures the greenback
against a basket of six major currencies, slipped down 0.1 percent to 90.256 after climbing to 90.445 on Tuesday, its highest in almost three weeks. With a 25 basis point interest rate hike seen as a done deal, investors will be on the lookout for whether the Fed forecasts four rate increases in 2018, instead of the median of three hikes in December's quarterly forecast. "Dealers will be looking at forward guidance to determine the dollar's prospects, and therefore that of gold," said Alasdair Macleod, head of research with Toronto-based Goldmoney Inc. The Fed will make an announcement on interest rates at 1800 GMT on Wednesday and new Fed Chairman Jerome Powell will hold his first news conference at 1830 GMT. The expectations for a faster pace of U.S. rate hikes has caused gold to fall 4 percent from a 1-1/2-year high reached in January. Higher U.S. interest rates reduces demand for gold for non-interest-bearing bullion. Heightened geo-political tensions, inflation concerns, trade wars and runaway U.S. budget deficit spending should serve to counteract the well-expected Fed rate hike and keep the floor on gold prices intact, Stephen Innes, APAC trading head at OANDA said.
Holdings in the SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, holdings rose 1.26 percent, their best one-day percentage rise since Jan. 18, to 850.84 tonnes on Monday. SPDR holdings, however, fell 0.04 percent on Tuesday.
U.S. President Donald Trump is expected to unveil up to $60 billion in import duties on Chinese goods by Friday. The move comes after Trump imposed tariffs on imported steel and aluminum earlier this month. Investors are worried Trump's actions could escalate into a trade war if China and other countries retaliate with similar or harsher measures, threatening global growth.
Among other precious metals, spot silver rose 0.5 percent to $16.26 per ounce, while platinum gained 0.4
percent to $944.50 per ounce.
Palladium was 0.3 percent higher at $981.65 per
(Reporting by Eileen Soreng and Nallur Sethuraman in Bengaluru, Editing by Sherry Jacob-Phillips and Christian Schmollinger)