By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Gold struggled to set a clear course in Asian trading Monday, trading in a tight band with investors expected to remain cautious ahead of the U.S. Federal Reserve's policy-setting meeting this week. At 0447 GMT, spot gold was at $1,642.37 a troy ounce, down 3 cents from its previous close. A stronger dollar kept the bulls at bay, as dollar-denominated commodities appear costlier to holders of other currencies when the greenback rebounds. The euro was at $1.3195 compared to $1.3215 late Friday in New York. "Most investors are on the sidelines and likely to remain there ahead of the [Fed] meeting," Director Ronald Leung of Lee Cheong Gold Dealers in Hong Kong said. While analysts don't expect Fed Chairman Ben Bernanke to announce any asset purchases, a loosening of monetary policy known as quantitative easing, market participants will be watching for signs on how long the Fed is prepared to continue its low-interest-rate policy. Increased liquidity following a previous round of quantitative easing helped gold climb to a record $1,920.94 a troy ounce in September. "We could see some selling if Bernanke does not announce any QE," Lee Cheong Gold's Leung said, tipping initial support at $1,625/oz and then at $1,600/oz. ANZ analysts said in a note that after disappointing safe-haven inflows, it expects gold to end the second quarter at $1,740/oz, 2.2% lower than its previous forecast. Spot silver was at $31.62/oz, down 8 cents. Barclays analyst Suki Cooper said in a note that the metal's market is in surplus, and thus still dependent on investment interest. "After peeping above $37/oz, silver prices have ground lower to stabilize above $31/oz, but with investment demand not as prominent as it was last year, are prices likely to draw support from fundamentals?" she asked. Platinum was at $1,575.50/oz, down $1.50. Commerzbank analysts said in a note that platinum is getting a boost from the jewelry sector. "The fact that platinum has recently been used increasingly in the jewelry industry does not seem to be a temporary phenomenon," the house said, adding that it expects the metal's prices to reach around $1,850/oz by year-end. Palladium was at $672/oz, down $2. Commerzbank said a palladium supply deficit expected by Johnson Matthey this year is likely to be significantly wider without the sale of the metal from Russian state reserves. It said it expects prices to increase to around $850/oz by the end of the year. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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