* Fed policy meeting begins on Tuesday * Central bank meetings, U.S. jobs data due this week * Shanghai premiums fall to about $20/oz (Updates throughout, changes dateline from SINGAPORE) By Clara Denina LONDON, July 30 (Reuters) - Gold edged lower on Tuesday, as the dollar steadied and traders shied away from taking big bets ahead of a Federal Reserve meeting being closely watched for the U.S. stimulus programme. The Fed starts its two-day policy meeting on Tuesday and is expected to release a statement on Wednesday afternoon. Markets are watching this for clues on when the U.S. central bank will start to taper or reduce its $85 billion monthly bond purchases. Spot gold fell 0.3 percent to $1,322.51 an ounce by 1017 GMT, extending Monday's downside that snapped three weeks of gains. U.S. gold futures for August fell $6.50 to $1,321.90 an ounce. Prices regained the $1,300 level for the first time in a month last week, buoyed by remarks from Fed chief Ben Bernanke that a highly accommodative monetary policy is needed for the foreseeable future and that any reduction in bond purchases is not set in stone and depends on the strength of the economy. The Fed had previously said it would likely begin reducing its stimulus later in 2013 and halt it altogether by mid-2014, which strengthened the dollar, making assets priced in the greenback such as gold more expensive for foreign investors. "There were initially very strong reactions to the idea of tapering... but the Fed is now trying to persuade people that ok they may taper QE3 but fundamentally that does not change the stance on monetary policy and rates will remain on hold for a protracted period," Natixis analyst Nic Brown said. The dollar inched above a five-week low hit in the previous session, but was lower against the euro after eurozone consumer sentiment data showed improvement in July. Benchmark U.S. 10-year Treasury yields were above 2.5 percent. In addition to the Federal Reserve, the European Central Bank and the Bank of England also hold policy reviews this week. Investors are also waiting for second quarter U.S. growth data due on Wednesday and the influential U.S. jobs report for July on Friday. "If you see some more dovish comments from European central banks this week and a stronger employment number in the United States, you'll get some strengthening in the dollar and Treasury yields, which would be bad news for gold," Brown said. ASIAN BUYING SLOWS Gold jewellery demand in top buyer India ebbed and was seen as unlikely to gain traction until late August, when seasonal buying during the autumn wedding season and religious festivals should pick up again. Buying from China was also subdued, with prices on the Shanghai Gold Exchange falling to about $20 an ounce over London spot prices, compared to above $25 last week. "Since the prices have come back $150 from their low, demand has slowed down. In fact we are seeing some small de-hoarding from the Far East; it's not a lot but they are definitely taking some profit at these price levels," Ng Cheng Thye, head of precious metals at Standard Bank in Singapore, said. Silver fell 1 percent to $19.61 an ounce, around $1 lower than a one-month high of $20.60 hit last week. Platinum dropped 0.5 percent to $1,431.99 an ounce and palladium lost 0.8 percent to $736.16 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; editing by James Jukwey)

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