* U.S. dollar up on news Trump may propose higher tariff on Chinese imports
* Fears of escalation in trade war hits Asian stocks, yuan
* Spot gold looks neutral in $1,214-$1,226/oz range - technicals
(Adds comments, updates prices) BENGALURU, Aug 1 (Reuters) - Gold prices dropped on Wednesday, pressured by a stronger U.S. dollar ahead of the outcome of a Federal Reserve monetary policy meeting later in the day. "The dollar is up ahead of the Federal Open Market Committee (FOMC) statement, and this provides us with an indication of which way the FOMC is going to move," said Naeem Aslam, chief market analyst, ThinkMarkets. The U.S. dollar, in which the yellow metal is priced, rose against the yuan and growth-leveraged currencies on Wednesday after a source familiar with the Trump administration's plans said the White House was about to propose higher tariffs on $200 billion in Chinese imports. The news raised concerns of escalation in the tariff war between the United States and China and sent Asian shares lower with weak data in the region.
Spot gold was down 0.2 pct at $1,220.77 an ounce, as
of 0713 GMT. The bullion gained slightly in the previous session on a weaker dollar versus the yuan after a report that the United States and China were trying to restart negotiations to defuse a potential trade war.
U.S. gold futures were 0.3 percent lower at
$1,220.10 an ounce. "The trade tensions are also fueling safe-haven flows into the dollar. The greenback still appears to be the preferred safe haven rather than gold," OCBC analyst Barnabas Gan said. Meanwhile, investors also focused on the outcome of a two-day U.S. Federal Reserve monetary policy meeting for outlook on interest rates. The Fed is expected to keep rates unchanged, but solid economic growth combined with rising inflation are likely to keep it on track for another two hikes this year even as U.S. President Donald Trump has ramped up criticism of its push to raise rates. With the Fed expected to stay the course with two interest rate rises, which should underpin near-term dollar sentiment, speculators will continue to fade upticks in gold in the absence of safe haven and sluggish physical demand, said Stephen Innes, APAC trading head at OANDA. Higher U.S. interest rates tend to boost the dollar and pressure gold. Spot gold looks neutral in a range of $1,214-$1,226 per ounce, Reuters technicals analyst Wang Tao said.
In other precious metals, silver declined 0.8 percent to $15.40 an ounce. Platinum lost 0.8 percent to $828.20 an ounce and palladium slipped 0.3 percent to $927.22.
(Reporting by Apeksha Nair in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)