Fed officials previously projected three rate hikes in 2017, but that might move up to four


Gold prices struggled near a six-week low during European morning hours on Tuesday, as investors prepared for a rate hike by the Federal Reserve while focusing on political developments in Europe.

Comex gold futures dipped $2.55, or around 0.2%, to $1,200.55 a troy ounce by 4:15AM ET (08:15GMT), not far from Friday's low of $1,194.50, which was the weakest level since January 31.

Meanwhile,spot gold was down $3.10 at $1,201.15 per ounce.

The Fed is scheduled to conclude its two-day policy meeting on Wednesday, with most market participants expecting the U.S. central bank to raise the fed funds target range by a quarter point, which would put it in a range between 0.75%-1%.

The U.S. central bank will also release its latest forecasts for economic growth and interest rates, known as the "dot-plot".

Fed Chair Janet Yellen's post-meeting press conference will be closely watched for clues on the pace of future rate hikes. Fed officials previously projected three rate hikes in 2017, but that might move up to four, amid signs of an uptick in inflation and continued strength in the jobs market.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up around 0.3% at 101.52 in London morning trade, moving away from the prior session's two-week low of 100.86.

Besides the Fed meeting, there are other issues that will get the attention of markets. The Dutch election on Wednesday is being watched as a bellwether for the spread of populism in Europe, particularly ahead of next month's French election.

Opinion polls have suggested that Dutch nationalist Geert Wilders' right-wing Freedom Party, which wants to take the Netherlands out of the European Union and stop Muslim immigration, has lost its lead to more mainstream opponents.

However, a diplomatic standoff with Turkey threatened to overshadow the final stretch of campaigning and influence voting in Wilders' favor with less than 24 hours to polling day, prompting investors to remain weary over the possibility of a Brexit or Trump-style shock result.

Meanwhile, markets braced for U.K. Prime Minister Theresa May to trigger Article 50, which kicks off the process of exiting the European Union, after parliament passed legislation giving her the power to start the exit process.

Also on the Comex, silver futures for May delivery shed 4.4 cents, or around 0.3%, to $16.92 a troy ounce.

Meanwhile in metals trading, copper futures dipped 0.6 cents, or 0.3%, to $2.619 a pound.