Gold gains on weaker dollar; traders brace for Fed rate decision

• Fed's interest rate decision due this week
• Gold may trade in the $3,200-$3,350 range ahead of the Fed meeting, analyst says
• Dollar down 0.3% against its rivals

By Anushree Mukherjee

May 5(Reuters) - Gold firmed on Monday, supported by a softer dollar, as investors waited to see how U.S.-China trade relations will unfold, and for the Federal Reserve's policy meeting due later this week.

Spot gold XAU= gained 0.6% to $3,259.29 an ounce, as of 0623 GMT. U.S. gold futures GCcv1 rose 0.8% to $3,267.70.

The dollar .DXY was down 0.3% against its rivals, making gold more attractive for other currency holders. USD/

"The U.S. dollar is looking subdued ahead of the Fed meeting this week which is enabling gold to take a mild run higher," KCM Trade Chief Market Analyst Tim Waterer said.

"We may see gold continue to operate in the $3,200-$3,350 range ahead of the Fed meeting. However, any new headlines on the trade deal could cause volatility to tick up once again."

The market's focus will be on the U.S. central bank policy decision and speeches by several Fed officials due this week, for insights into future monetary policy trajectory.

Traders are now expecting 80 basis points of rate cuts this year starting in July, following larger-than-expected U.S. job additions in April. USDIRPR

Non-yielding gold acts as a hedge against global uncertainty and inflation and tends to thrive in a low-interest-rate environment.

U.S. President Donald Trump said he will not remove Jerome Powell as Fed Board Chairman before his term ends in May 2026, while reiterating his call for the Fed to cut interest rates.

Trump on Sunday said the U.S. was meeting with many countries, including China, on trade deals, and his main priority with China was to secure a fair trade deal.

Chinese markets are closed for the Labour Day holiday from May 1-5 and will resume trade on Tuesday, May 6.

Spot silver XAG= rose 1.1% to $32.33 an ounce, platinum XPT= was up 0.1% to $961.20 and palladium XPD= gained 0.5% to $958.38.

Spot gold price in USD per oz