* Investors weigh chances of BoE hiking interest rates
* Gold to be supported if yields trade at current levels - analyst
* U.S manufacturing activity slows in October
Nov 2 (Reuters) - Gold held steady on Tuesday as market participants awaited a key U.S. Federal Reserve policy meeting in the face of growing inflationary pressures and worries over weaker economic growth.
Spot gold was little changed at $1,793.60 per ounce by 0649 GMT. U.S. gold futures rose 0.1% to $1,796.70.
Stephen Innes, managing partner at SPI Asset Management, expects gold to remain under pressure in an environment of central bank tightening, with the Fed most likely to announce the start of stimulus tapering at the end of its two-day meeting on Wednesday.
“But, provided U.S. 10-year yields continue to trade around current levels, suggesting a weaker growth outlook in bondholders’ minds, gold could remain supported,” Innes said.
Benchmark 10-year yields held above 1.5% on Tuesday, but were down from the multi-month highs of around 1.7% hit last month.
Innes said central banks were unlikely to start an aggressive rate hike campaign given weaker economic data such as the Institute for Supply Management survey on Monday that showed U.S. manufacturing activity had slowed last month.
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising non-yielding bullion’s opportunity cost.
Focus will also be on the Bank of England policy meeting on Thursday as investors weigh chances of the first interest rate hike by a major central bank since the pandemic.
Hareesh V, the head of commodity research at Geojit Financial Services, said an expected increase in physical demand in India and China this quarter could provide some support to gold prices.
“Gold should find minor support at $1,760 and a sharp fall below the major support level of $1,665 is unlikely,” Hareesh said, adding the metal’s performance ultimately hinged on the dollar, central bank policies and the performance of risk assets.
Spot silver fell 0.3% to $23.94 per ounce. Platinum dropped 0.7% to $1,056.38 and palladium eased 0.1% to $2,044.97.
(Reporting by Nakul Iyer in Bengaluru; Editing by Sherry Jacob-Phillips)