PRECIOUS-Gold recovers as Middle East tensions buoy demand; Fed meeting in focus

June 17 (Reuters) - Gold prices rebounded on Tuesday, as rising tensions between Israel and Iran buoyed demand for the safe-haven asset, while investors looked forward to the outcome of the U.S. Federal Reserve's policy meeting this week.

FUNDAMENTALS

Spot gold XAU= rose 0.5% at $3,399.90 an ounce, as of 0048 GMT, after dropping more than 1% in the previous session.

U.S. gold futures GCcv1 edged 0.1% higher to $3,419.20.

Israel and Iran attacked each other for a fifth straight day on Tuesday, and U.S. President Donald Trump urged Iranians to evacuate Tehran, citing what he said was the country's rejection of a deal to curb nuclear weapons development.

On Monday, an Israeli strike hit Iran's state broadcaster and the head of the U.N. nuclear watchdog also indicated extensive damage to Iran's biggest uranium enrichment plant.

Gold is considered a safe-haven asset during times of geopolitical and economic uncertainty.

Investors will look forward to a host of central bank monetary policy decisions this week, with the spotlight on the Fed.

The U.S. central bank is widely expected to keep interest rates unchanged at the end of its policy meeting on Wednesday. FEDWATCH

Its Chair Jerome Powell's comments following Fed's interest rate decision will be eagerly watched for more cues on the rate cut path.

Stock indexes closed higher after last week's losses and a barrel of oil got $1 cheaper on Monday as investors took heart from reports that Iran was seeking to end hostilities with Israel. MKTS/GLOB

SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.15% to 941.93 tonnes on Monday from 940.49 tonnes on Friday. GOL/ETF

Elsewhere, spot silver XAG= was up 0.1% at $36.35 per ounce, platinum XPT= fell 0.3% to $1,242.03, while palladium XPD= eased 0.2% to $1,027.50.