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U.S. dollar edges up 0.2%

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FOMC meeting scheduled for 1400 ET

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BofA: Gold to push higher in 2H25, potentially hitting

$4,000/oz

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China's central bank buys gold for sixth straight month in

April

(Updates prices as of 0957 ET)

By Sarah Qureshi

May 7 (Reuters) - Gold prices fell more than 1% on

Wednesday, pressured by a firmer dollar and U.S.-China trade

talks optimism, while the focus is on Federal Reserve's policy

decision due later in the day.

Spot gold slipped 1% to $3,395.29 an ounce as of 0957

ET (1357 GMT). U.S. gold futures lost about 0.6% to

$3,403.50.

The U.S. dollar gained 0.2% against other fiat currencies. A

stronger dollar makes gold more expensive for other currency

holders.

"China and the United States are formally trying to start a

conversation on tariffs, igniting optimism in risk markets,"

said Bart Melek, head of commodity strategies at TD Securities.

U.S. Treasury Secretary Scott Bessent and chief trade

negotiator Jamieson Greer will meet China's economic tsar He

Lifeng in Switzerland this weekend for talks that could be the

first step toward resolving a trade war disrupting the global

economy.

Gold, considered a hedge against geopolitical risks, has

risen 29.4% so far this year.

Bank of America said, "while we see limited upside (for

gold) near term, we expect prices to push higher again in second

half of 2025, potentially hitting $4,000."

China's central bank added gold to its reserves in April for

the sixth straight month, official data showed.

Meanwhile, the Fed's policy decision is due at 1400 ET (1800

GMT) today, followed by Chair Jerome Powell's speech. The market

will watch out for cues on policy outlook.

"If the Fed surprises and is a lot more hawkish than the

market expects, we think there is strong support above $3,100,"

Melek added.

The Fed in the past had indicated that it was in no hurry to

cut rates and market consensus is that there will be no cuts

before July.

Higher interest rates tend to pressure bullion as it yields

no interest.

Elsewhere, spot silver shed 1.4% to $32.81 an ounce,

platinum dropped 0.1% to $986.15 and palladium

edged 0.7% higher to $981.03.