By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Gold was trading lower in the Asian session Monday with a stronger U.S. dollar limiting buying interest and prices expected to remain mostly range-bound ahead of a key two-day meeting of the U.S. Federal Reserve policy-setting committee next week. Equities and most commodities including copper were also lower on growing concerns over rising borrowing costs in Spain that sent the euro lower. Market participants said China's decision over the weekend to allow the yuan to trade in a wider daily range against the dollar had little impact. At 0441 GMT, spot gold was at $1,648.50 a troy ounce, down $10 from its previous close. The euro was at $1.3022 compared with $1.3077 late Friday in New York. "The yellow metal is moving mostly in line with the risk currencies such as euro," IG Markets strategist Stan Shamu said, adding that the metal could slip lower toward $1,630/oz once it fell below the current support at $1,650/oz. Gold fell about 1% Friday on worries of slowing economic growth after China's first quarter gross domestic product growth came in at 8.1% on year, well below the median forecast for 8.3% in a Dow Jones poll of economists. "If China growth concerns persist, it could be negative for gold as well," Shamu said. China is one of the biggest consumers of the metal and some analysts expect Chinese gold demand to eventually overtake that of India, historically the biggest consumer. "Most of the investors are waiting for the FOMC [Federal Open Market Committee] meeting next week for hints of quantitative easing," said Ronald Leung, director of Lee Cheong Gold Dealers Ltd. Increased liquidity following asset purchases by the Fed, known generally as quantitative easing, had helped gold climb to a record $1,920.94 a troy ounce in September 2011. But the metal has been under pressure in recent months after hopes of a 3rd round of quantitative easing by the Fed faded amid a recovering U.S economy. Leung said he expects the current weak demand trend in gold to reverse if prices fall to around $1,630/oz. In the case of silver, most analysts said the metal remained vulnerable to downside risks. According to Phillip Futures Investment Analyst Lynette Tan, prices are likely to display volatility and remain biased to the downside in the second quarter of 2012. At 0441 spot silver was at $31.33/oz, down 17 cents while platinum was at $1,566/oz, down $15 and palladium at $640.50/oz, down $1.50. Barclays Capital analysts said in a note that the potential for platinum supply disruptions continue to linger, while interest in palladium exchange-traded products has "failed to support prices, as concerns about China and the global economy weighed upon the metal." Platinum and palladium are widely used as auto catalysts. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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