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Gold falls ahead of US data-heavy week, Fed chair decision

[NEW YORK] Gold prices fell on Tuesday as the US dollar was firm for much of the session and precious metals investors turned cautious ahead of central bank meetings this week, US payrolls data and the announcement of the next US Federal Reserve chair.

Spot gold slipped 0.4 per cent to US$1,270.40 an ounce by 2.40pm EDT (1840 GMT), headed for a second-straight monthly decline.

US gold futures for December delivery settled down US$7.20, or 0.6 per cent, at US$1,270.50 per ounce, a 1 per cent monthly decline.

The dollar was flat, initially underpinned by solid US data, but on track for its second straight monthly increase.

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The Fed started a two-day policy meeting during Tuesday's session with speculation mounting that Trump will pick Fed Governor Jerome Powell as the next head of the US central bank on Thursday.

Mr Powell is seen as more dovish than other contenders for the post, such as Stanford University economist John Taylor.

"Somebody from within the Fed, even if they're more dovish, might be less bullish for gold, because they would be seen as being better suited to manage monetary policy," said Jeffrey Christian, managing partner of CPM Group in New York.

That could result in a stronger US dollar, he added, which typically makes dollar-priced gold more expensive for holders of other currencies.

The Fed is scheduled to release its statement following its meeting on Wednesday at 2pm EDT.

Market participants were awaiting the Bank of England policy meeting on Thursday and more data, including US payrolls figures on Friday.

Meanwhile, global equities were heading for a record 12th month of gains as a 5-1/2-month high in European stocks and records elsewhere underscored one of the most robust bull markets on record.

Rising equity markets usually indicate confidence in economic growth, which reduces gold's appeal as a safe-haven asset.

"The market is catching its breath for what will be a very data-heavy second half of the week," said Jeffrey Halley, a senior market analyst with Oanda.

"Gold itself appears to have lost any risk-aversion premium for now and is thus completely at the mercy of the nuances of the US bond and stock market, and by default the US dollar."

Among other precious metals, silver fell 0.7 per cent to US$16.71 an ounce, but headed toward a 0.5 monthly increase. Platinum dipped 0.1 per cent to US$915.24 an ounce, though poised for a nearly 0.8 per cent monthly increase. Palladium climbed 1.6 per cent to US$980 an ounce, on track for a 4.8 per cent monthly gain.