* U.S. dollar pares gains after Fed statement
* Fed holds U.S. interest rates steady as expected
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl
(Recasts to include Fed statement, updates prices; adds NEW
YORK dateline, comment)
By Marcy Nicholson and Zandi Shabalala
NEW YORK/LONDON, Aug 1 (Reuters) - Gold eased on Wednesday
as the dollar strengthened, and stayed weaker after the U.S.
Federal Reserve kept interest rates steady as expected.
The Fed, after a two-day meeting, characterized the U.S.
economy as strong, keeping the central bank on track to increase
borrowing costs in September.
Spot gold was down 0.3 percent at $1,219.60 an ounce
by 2:48 p.m EDT (1848 GMT), close to a one-year low of $1,211.08
reached on July 19.
"Gold continues to flounder near recent lows after the Fed's
August statement gave no indication yet when the committee will
diverge from the projected one-hike-a-quarter strategy," said
Tai Wong, head of base and precious metals trading at BMO
Capital Markets in New York.
"As a result, the burgeoning trade wars on multiple fronts
will continue to support the dollar, making the outlook for gold
and other U.S. dollar-denominated commodities clouded at best
for the balance of the summer."
U.S. gold futures settled down $6, or 0.5 percent,
at $1,227.60 per ounce, prior to the Fed statement.
"Nobody was expecting the Fed to raise rates today, and
nobody was expecting the committee to back away from its plans
for further hikes ahead," said Avery Shenfeld, chief economist
at CIBC Economics in Toronto. "The central bank stuck to the
expected script."
The U.S. dollar , in which gold is priced, pared gains
against a basket of leading currencies after the Fed statement.
Earlier in the session, it firmed after a source familiar with
the Trump administration's plans said the White House was about
to propose higher tariffs on $200 billion in Chinese imports.
"Bullion is falling every time the U.S. dollar is
strengthening, but it's unable to recover when the greenback
loses ground, confirming that there's little investor appetite
for gold in this phase," said ActivTrades chief analyst Carlo
Alberto De Casa.
World stocks were mixed, with fears of an imminent
escalation in the U.S.-China tariff war holding back gains,
though robust results from technology company Apple Inc
boosted a key index on Wall Street.
"The trade tensions are also fueling safe-haven flows into
the dollar. The U.S. currency still appears to be the preferred
safe haven rather than gold," OCBC analyst Barnabas Gan said.
Silver declined 0.6 percent to $15.42 an ounce.
Platinum dropped 2.1 percent to $817.24 an ounce and
palladium slipped 1.3 percent to $917 an ounce.
(Additional reporting by Apeksha Nair in Bengaluru. Editing by
Jane Merriman, Louise Heavens and Richard Chang)