May 2 (Reuters) - Gold prices traded in a narrow band on Tuesday as investors awaited clues on the path of interest rates from the U.S. Federal Reserve's policy meeting.
Spot gold rose 0.3% to $1,987.99 per ounce by 1053 GMT, while U.S. gold futures rose 0.2% to $1,996.00.
The Federal Open Market Committee's two-day meeting starts later in the day, where it is widely expected to raise rates by 25 basis points.
Gold has been trading fairly steady ahead of the Fed meeting and the market is waiting to see "whether there's any indication that they're going to hold on for a while after this hike," Bank of China International analyst Xiao Fu said.
Bullion has also been supported by some safe-haven demand from the resurgence of worries over the banking sector's health as well as U.S. debt ceiling uncertainty, she added.
Gold clocked a more than 1% gain in April amid the U.S. banking crisis and briefly rose above $2,000 on Monday after regulators seized and sold First Republic Bank's (FRC.N) assets to JPMorgan Chase & Co (JPM.N), in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis.
"It may be wise to also watch out for the European Central Bank meeting (on Thursday) which is expected to conclude with a 25bp rate hike. Any unexpected moves by the central bank may influence the euro, which in turn could impact the dollar and trickle down to gold," said Lukman Otunuga, senior research analyst at FXTM.
While gold is considered a hedge against economic uncertainties, rising rates hurt demand for the zero-yielding asset.
Meanwhile BullionVault director of research Adrian Ash said "the underlying physical price continues to find strong support from China's consumer demand and the seemingly relentless bid from emerging market central banks."
Elsewhere, spot silver fell 0.8% to $24.78 per ounce, while palladium rose 0.5% to $1,458.54.
Platinum was little changed at $1,049.52.
