Gold slips as investors await Fed rate signals

Oct 21 (Reuters) - Gold slipped on Wednesday as investors awaited next week's Federal Reserve policy decision for fresh signals on the trajectory of US interest rates.

FUNDAMENTALS

* Spot gold was down 0.1% at $4,118.64 per ounce by 0018 GMT, while US gold futures for December delivery dropped 0.1% to $4,137.60.

* The Fed will skip raising interest rates this month and deliver a hike in December, according to nearly all economists polled by Reuters, as policymakers signal patience even as stubborn inflation argues for a tougher response.

* Focus has turned to the Fed's October 27-28 policy meeting and next week's Personal Consumption Expenditures (PCE) data, a key gauge closely watched by the central bank as it targets a 2% inflation rate.

* According to CME's FedWatch Tool, traders are pricing in an 84% chance that the central bank will leave rates unchanged next week, while expectations for a hike in December remain at 90%.

* Higher interest rates typically weigh on gold prices because they increase the opportunity cost of holding bullion, which does not pay interest.

* The Bank of Japan will raise rates in December to 1.50%, following June and September increases, according to a majority of economists in a Reuters poll, keeping up a quicker pace in a campaign that started with just one rate rise a year.

* Bank of England policymaker Megan Greene said the risks of a pickup in broader inflation from the energy price shock caused by the Iran war were greater than the BoE expected. She reiterated her view that interest rates should go up.

* On the geopolitical front, Iranian President Masoud Pezeshkian discussed mediation efforts and regional developments during a meeting with Pakistan's army chief, Field Marshal Asim Munir, in Tehran, Iran's Nournews reported on Tuesday.

* Among other metals, spot silver steadied at $57.95 per ounce, platinum rose 0.5% to $1,656.10 and palladium was little changed at $1,102.13.