MARKETS-COMMODITIES * Oil turns up. first time in four sessions ahead of Fed * Gold slips, copper gains as investors await Fed news * Wheat falls in volatile day, confusion over Russian crop * Due Tuesday: Fed's policy meeting, June inventory data By Carole Vaporean NEW YORK, Aug 9 (Reuters) - Oil, copper and most other U.S. commodities were modestly higher by Monday's close, but gold slipped as investors positioned themselves ahead of the Federal Reserve's policy-setting meeting. Wheat closed lower for the second straight session after a volatile day that featured confusion over the outlook for Russian supply. Hefty global inventories have helped blunt the impact on immediate prices from Russia's worst drought in a century, but wheat futures for 2011 and beyond rallied sharply on fears that unrelenting heat could damage the winter-sown crop that Russian farmers plant in September. The RJ/CRB index of 19 commodities, a global benchmark for the asset sector, slipped 0.04 percent, or 0.12 points, to settle at 274.59, (Graphic: http://link.reuters.com/kyv37m) Most financial markets were looking ahead to Tuesday at 2:15 p.m. EST (18:15 GMT), when Federal Reserve policy makers are scheduled to announce their decsision. Most analysts expect the Fed to keep its key interest rate targets near zero, but many fear the U.S. central bank may try to revitalize the faltering economic recovery by printing more money. Investors will watch the Fed's statement for signs of heightened concern about risk to economic growth or fears of a vicious a cycle of falling prices and slowing growth. Commodity futures were expected to remain rangebound with investors setting up for either weaker demand or potential inflation, depending on what the Fed says on Tuesday. "I think a lot of the markets today are just sort of on hold. The Fed meeting will be an important one," said Frank Lesh, futures analyst with Future Path Trading in Chicago. U.S. crude oil futures prices settled higher, breaking a string of three losing sessions, lifted by expectations the Fed may signal readiness to reflate the faltering economy. Also supporting crude prices were geopolitical tensions between the West and Iran over Tehran's nuclear program. A possible tropical weather threat to Gulf of Mexico energy operations also conspired to prop September crude up 78 cents, or 0.97 percent, to settle at $81.48 a barrel. Copper prices ended slightly stronger, boosted by expectations of healthy demand from top consumer China, but gains were limited ahead of the Fed's announcement. Gold futures ended lower, snapping eight sessions of gains, as a stronger dollar prompted investors to lock in profits ahead of the Fed's statement. "Whether it be inflation or deflation, gold happens to be the choice right now, especially in any type of crisis," said Michael Daly, gold specialist at Chicago futures broker PFGBest. Daly said he thought gold's price should remain supported in the near term by buying for India's wedding season starting in September, and safe-haven demand. In the grains sector, nearby wheat prices fell for a second day, ending a volatile session that drove prices higher early after Russian Prime Minister Vladimir Putin stoked anxiety by saying some key regions in Russia will not be able to start winter sowing. He also said the ban on exports imposed last week could last longer than Dec. 31. "The market is being jerked around by these conflicting signals by the Russians," said Dan Manternach, wheat analyst for Doane Advisory Services. Chicago Board of Trade wheat for September delivery fell 1.8 percent to $7.12-1/2 per bushel. (Reporting by Carole Vaporean; Editing by David Gregorio)

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