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US Fed two-day policy meeting begins on Tuesday

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Fed seen cutting rates for first time since December

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US dollar at a one-week low

(Updates prices after gold hits record high)

By Anushree Mukherjee and Sherin Elizabeth Varghese

Sept 15 (Reuters) - Gold rose to an all-time high on

Monday, underpinned by a softer dollar and lower Treasury

yields, as investors positioned ahead of a pivotal Federal

Reserve meeting this week that could set the tone for the rest

of the year.

Spot gold was up 0.9% at $3,674.09 per ounce as of

1151 a.m. EDT (1551 GMT), after hitting a record high of

$3,674.63 earlier in the session. Bullion climbed about 1.6%

last week.

U.S. gold futures for December delivery were up 0.7%

at $3,712.70.

The dollar index fell to a one-week low, making gold

more attractive for other currency holders, while the benchmark

U.S. 10-year Treasury yield edged lower.

Markets are all but certain the Fed will deliver a

25-basis-point rate cut on Wednesday, the first since December,

with some still holding out for a larger 50 bps move, according

to CME's FedWatch tool.

"Expectations of a 25 basis point rate cut are largely baked

into the cake at this point," said Peter Grant, vice president

and senior metals strategist at Zaner Metals, adding that there

could be one or two more rate cuts before the year-end.

Non-yielding bullion, often considered a safe-haven asset

during broader uncertainty, tends to perform well in a low

interest rate environment.

The $3,700 mark looks like the next upside target, with

other important levels at $3,730 and $3,743 in the short term,

Grant added.

The Fed meets under unusual pressure, with a leadership

dispute and President Donald Trump pushing for greater sway over

policy. The Senate has also left the door open for Trump's

economic adviser Stephen Miran to join the rate-setting

committee in time to vote on Wednesday.

Data last week showed U.S. consumer prices rose at their

fastest pace in seven months in August, while recent jobs

figures have pointed to a weakening labor market, keeping the

Fed on track to cut rates.

Elsewhere, spot silver was up 1% at $42.59 per ounce,

platinum gained 0.5% to $1,397.80 and palladium

lost 1.4% to $1,181.09.