PRECIOUS-Gold falls over 1%, spotlight on Israel-Iran conflict and Fed meeting

By Ashitha Shivaprasad and Anushree Mukherjee

June 16 (Reuters) - Gold slipped more than 1% on Monday as traders took profits after prices hit an eight-week high, while the market focused on Israel-Iran tensions and the Federal Reserve's policy meeting this week.

Spot gold XAU= was down 1.2% to $3,392.86 an ounce by 01:53 p.m. EDT (1753 GMT) after hitting its highest level since April 22 earlier in the session. Prices rose more than 1% on Friday.

U.S. gold futures GCcv1 settled 1% lower at $3,417.30.

"Keep in mind that gold has moved higher over the past several sessions, largely in response to the conflict between Israel and Iran. Today, we're seeing more of a pullback, likely due to profit-taking after that higher move," said David Meger, director of metals trading at High Ridge Futures.

Iran called on U.S. President Donald Trump to force Israel to cease fire as the only way to end the four-day-old aerial war, while Israeli Prime Minister Benjamin Netanyahu said his country was on the "path to victory".

Meanwhile, leaders from the Group of Seven nations begin annual talks in Canada.

U.S. stock index futures rose while the dollar was softer in choppy trading. .N USD/

Investors are also focused on the Fed's two-day policy meeting, which wraps up on Wednesday. The U.S. central bank is widely expected to keep interest rates unchanged. FEDWATCH

"At this point, it appears the Fed is inclined to remain on hold, given the significant uncertainty in the economy, ranging from tariffs to geopolitical tensions. So, it wouldn't be surprising to see the Fed delay any interest rate cuts, effectively kicking the can down the road," Meger said.

Bullion is viewed as a safeguard during times of geopolitical instability and rising inflation. It also benefits from low interest rate environments, since it doesn't offer any yield income.

Among other metals, spot silver XAG= steadied at $36.33 per ounce, platinum XPT= rose 2% to $1,252.57, while palladium XPD= gained 0.8% to $1,036.10.