Oct 29 (Reuters) - Gold prices tread water on Tuesday, after a sharp fall in the previous session, as markets awaited the U.S. Federal Reserve's rate decision, while optimism over a U.S.-China trade deal boosted demand for riskier assets.
* Spot gold was steady at $1,491.87 per ounce as of 0058 GMT. U.S. gold futures fell 0.1% to $1,494.20 per ounce.
* The Fed is scheduled to meet on Tuesday and Wednesday, where investors expect a reduction in borrowing costs for the third time this year.
* Federal fund futures imply that traders see a 92.5% chance for a 25 basis point rate cut by the U.S. central bank in its month-end monetary policy meeting.
* President Donald Trump said on Monday he expected to sign a significant part of a trade deal with China ahead of schedule but did not elaborate on the timing, building on optimism from last week when Washington said it was "close to finalising" some parts of a trade deal.
* Both U.S. and China have imposed a series of tariffs over the past 15 months, stimulating global recessionary fears and driving gold prices over 16% higher this year.
* The trade war between the two countries has hit financial markets and forced most major central banks to cut interest rates this year.
* Asian shares scaled a three-month high on Tuesday after Wall Street hit all-time peaks amid hopes of progress in Sino-U.S. trade talks and in expectation of another interest rate cut from the Federal Reserve this week.
* The European Union agreed to a Brexit delay of up to three months on Monday, as Prime Minister Boris Johnson said he would push on with his bid to end Britain's political paralysis with an election on Dec. 12.
* Palladium was flat at $1,800.43 after scaling to a record high in the previous session and hitting $1,800 an ounce for the first time ever.
DATA/EVENTS (GMT) 0700 UK Nationwide house prices Oct 0745 France Consumer Confidence Oct 0900* Italy Producer Prices YY Sept 0930 UK BOE Consumer Credit Sept 0930 UK Mortgage Lending Sept 0930 UK Mortgage Approvals Sept 1300 US CaseShiller 20 MM SA Aug 1400 US Consumer Confidence Oct 1400 US Pending Home Sales Change MM Sept U.S. Federal Reserve's Federal Open Market Committee starts its two-day meeting on interest rates (Reporting by Diptendu Lahiri in Bengaluru; editing by Aditya Soni)