(Adds comment, updates prices)
* Dollar rises to highest since Dec. 2
* Overall U.S. durable goods orders rise 2.4% vs 0.4% consensus
* New orders for key U.S.-made capital goods drop most in 8-months
* Fed's two-day policy meeting starts later in the day
By K. Sathya Narayanan
Jan 28 (Reuters) - Gold fell on Tuesday as equity markets rebounded following positive U.S. economic data while the dollar scaled a near two-month peak ahead of the U.S. Federal Reserve's policy meeting.
Spot gold was down 0.9% at $1,567.83 per ounce by 10:41 a.m. EST( 1541 GMT), having touched its highest since Jan. 8 on Monday. U.S. gold futures fell 0.7% to $1,567.
U.S. stock indexes opened higher after the S&P 500 suffered its worst day in nearly four months in the previous session, while U.S. 10-year Treasury yields rebounded from a near four-month low. The dollar rose to its highest since Dec. 2.
"There seems to be a little bit of a risk-on tone here. The fears of the coronavirus are still lingering in the market, (but) regardless of these fears there is going to a contingent that is willing to bargain hunt," said Ryan McKay, a commodity strategist at TD Securities.
"The durable goods number was better-than-expected so, that could be increasing the chances that the Federal Reserve would not be dovish in the FOMC meeting and that is weighing on prices."
In December, overall orders for durable goods rebounded 2.4% against an expected increase of 0.4%.
However, new orders for key U.S.-made capital goods dropped by the most in eight months, while shipments were weak suggesting that business investment contracted further in the fourth quarter.
The Fed's first policy meeting of the year is scheduled to start later in the day, where it is widely expected to keep the benchmark interest rates unchanged.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
However, concerns that the coronavirus outbreak could hinder the global economy persist, underpinning overall demand for gold, Julius Baer analyst Carsten Menke said.
Reactions to the spreading virus had been very different across markets and the (overall) decline in oil prices suggested a slowdown of economic activity in China.
The death toll from the virus reached 106 in China and some health experts questioned whether Beijing can contain the virus which has to more than 10 countries.
Elsewhere, palladium was up 0.2% at $2,271.88 per ounce, after falling about 7% on Monday.
"We assume that the correction will continue, as the upswing beforehand was exaggerated in our opinion," Commerzbank analyst said in a note.
Silver dropped about 3% to $17.56, while platinum rose 0.2% to $985.17. (Reporting by K. Sathya Narayanan in Bengaluru Editing by Marguerita Choy)