PRECIOUS-Gold gains on Middle East risks; Fed meeting in focus

Updates prices as of 1048 GMT

By Sherin Elizabeth Varghese

Jan 29 (Reuters) - Gold prices firmed on Monday growing concern over the Middle East bolstered bullion's safe-haven appeal while markets await this week's U.S. Federal Reserve policy meeting for a steer on interest rate expectations.

Spot gold XAU= gained 0.4% to $2,026.81 an ounce by 1048 GMT and U.S. gold futures GCcv1 was up 0.5% at $2,026.60.

"Despite the escalation in the Middle East conflict, gold didn't really escape the range. This means that what markets are still really focusing is on the Fed's monetary policy and the likely path of interest rate cuts," said Ricardo Evangelista, senior analyst at ActivTrades.

Commodities trader Trafigura on Saturday said it was assessing the security risks of further Red Sea voyages after firefighters put out a blaze on a tanker attacked by Yemen's Houthi group a day earlier.

Gold is considered a safe store of value amid political and economic turmoil.

The Fed's policy decision is due on Wednesday, having made a dovish tilt in the December meeting. Markets are widely expecting the U.S. central bank to leave rates unchanged at the end of the two-day meeting.

Data on Friday showed gentle growth in U.S. prices in December, keeping annual inflation below 3% for a third consecutive month, potentially allowing the Fed to begin cutting interest rates this year.

"In the short term, we expect the market to stay range-bound; but further out we see Fed rate cuts driving stronger ETF demand ... So we suggest buying on dips at or below $2,000/oz," UBS analysts said in a . GOL/ETF

In other precious metals, spot silver XAG= was up 0.6% at $22.94 an ounce, platinum XPT= fell 0.4% to $909.06 and palladium XPD= lost 0.8% to $947.93.

(Reporting by Sherin Elizabeth Varghese and Brijesh Patel in Bengaluru
Editing by David Goodman)

((sherinelizabeth.varghese@thomsonreuters.com;))