* Gold neutral in $1,313-$1,319 range - technicals
* Biggest gold ETF holdings drop 0.4 pct on Tuesday
* Fed statement due at 0200 pm ET later in the day
(Recasts, adds comment and updates prices)
By Swati Verma
Sept 21 Gold rose on Wednesday reversing earlier
losses, as the dollar pared gains ahead of the U.S. Federal
Reserve's policy outcome due later in the day, which is mostly
expected to keep interest rates unchanged.
Spot gold rose 0.5 percent at $1,321 an ounce by 0737
GMT. U.S. gold futures climbed 0.5 percent at $1,325 an
Both hawkish and dovish comments from Fed officials recently
stoked volatility in the financial markets, although consensus
is now centred on a U.S. rate hike by year-end, instead of
"There is no realistic chance of a rate hike priced into the
market at the moment, so if the Fed hikes interest rates this
evening we would definitely see a sell-off in commodities and
the emerging markets, including gold," said Jeffrey Halley,
senior market analyst, OANDA.
"If the Fed stays pat, we are going to see a big rally in
commodities. We will definitely see gold and silver moving
higher as well."
Fed Chair Janet Yellen is scheduled to conclude the U.S.
central bank's meeting with a press conference at 0200 pm ET
(1800 GMT) on Wednesday.
The dollar index, which measures the greenback
against six major currencies, pared gains and was nearly flat at
96.135 after rising as much as 0.3 percent.
The Bank of Japan on Wednesday decided to adopt a target for
long-term interest rates in an overhaul of its massive stimulus
Spot gold remains neutral in a range of $1,313-$1,319 per
ounce, and only an escape from this zone could give it a
direction, according to Reuters technical analyst Wang Tao.
"Gold prices have been consolidating for the past few days.
As long as prices remain within $1,300 levels, gold will most
likely rally," said Hareesh V, research head at Geofin Comtrade
However, "if the Fed raises interest rates, it can drop to
$1,245 levels," he cautioned.
Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, slid 0.41 percent to 938.75
tonnes on Tuesday.
Spot silver edged up nearly 1 percent to $19.45 an
"There is less liquidity in silver than gold and probably
that is driving prices. Also, investors are looking at the gold
silver ratio, which looks like it could be ready for a breakout
on the downside and will support silver," OANDA analyst Halley
Platinum climbed as much as 1.37 percent to $1,040,
and palladium gained nearly 1 percent to $687.10.
(Reporting by Swati Verma and Nallur Sethuraman in Bengaluru;
Editing by Tom Hogue and Sherry Jacob-Phillips)