* 
      Federal Reserve policy meeting on Jan. 31 - Feb. 1
    

        * 
      Benchmark U.S. 10-year yields at two-week high
    

  
 (Updates prices)
    By Seher Dareen
       Jan 30 (Reuters) - Gold prices edged down slightly in
choppy trade on Monday as investors looked ahead to the U.S.
Federal Reserve policy meeting this week amid expectations of a
slowdown in rate hikes.
    Spot gold  XAU=  inched 0.2% lower to $1,924.05 per ounce by
1:40 p.m. ET (1840 GMT). U.S. gold futures  GCv1  settled down
0.3% to $1,922.9.
    "The way that the Fed pitches that story will reflect in the
gold market," said Daniel Pavilonis, senior market strategist at
RJO Futures.
    "The bigger picture here is that if the Fed slows down on
rates, inflation comes roaring back. If the Fed pauses for a
little bit and inflation is still there - I think in that
scenario gold would take off."
    The 25-basis-points rate increase expected at the Federal
Open Market Committee's Jan. 31-Feb. 1 meeting would bring the
policy rate to the 4.5%-4.75% range, short of the 5% plus level
most Fed policymakers were vouching for. 
    Gold, which pays no interest, tends to benefit when interest
rates are low as it reduces the opportunity cost of holding
bullion.
    Expectations for a slowdown in Fed rate hikes grew after the
Fed's preferred inflation gauge - U.S. consumer spending - fell
for a second straight month in December, putting the economy on
a lower growth path heading into 2023.  FEDWATCH 
    However, the number of people filing for jobless benefits
keeps dropping - signalling a tight labour market that could
force the Fed to keep hiking rates.
    Meanwhile, benchmark U.S. 10-year bond yields were hovering
near two-week highs, while the dollar was up 0.2%, making gold
more expensive to holders of foreign currencies.  US/  USD/ 
    "A hawkish surprise from the Fed could see prices slip back
towards $1,900 in the short term," said Michael Hewson, chief
market analyst at CMC Markets, in a note. 
    Spot silver  XAG=  rose 0.1% to $23.59 per ounce and
platinum  XPT=  gained 0.2% to $1,014.38, while palladium  XPD= 
jumped 1.4% to $1,641.05.
 (Reporting by Seher Dareen in Bengaluru; Editing by Christina
Fincher and Devika Syamnath)
 ((Seher.Dareen@thomsonreuters.com; If within U.S. +1 646 223
8780;))