* Gold turns higher; platinum, palladium, silver all slide
* Dollar rises as fears over China knock risk appetite
* U.S. Fed meeting, GDP data eyed for impact on currencies
(Recasts, updates comments, closing prices, market activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 26 (Reuters) - Gold turned higher on Tuesday as the dollar erased some of its gains, and the metal is expected to take the lead from other markets ahead of Wedneday's Federal Reserve meeting and U.S. President Barack Obama's State of the Union speech.
Silver, platinum and palladium fell sharply earlier in the session, after China implemented a planned increase in required reserves for some banks, denting demand for industrial metals whose prices have been bid up by economic optimism.
"Gold rallied in sympathy with the fact that the stock markets went up," said Donald Selkin, chief market strategist at National Securities Corp.
He also cited the reversal of a "long platinum, short gold" trading strategy which was driven by investor buying of platinum related to demand from new exchange traded funds.
"If the dollar strengthens further and risk aversion increases, gold could break below major support area at $1,080" and a test of $1,000 is possible, said Selkin.
Spot gold <XAU=> hit a session low of $1,085.40 an ounce, and was at $1,099.25 an ounce by 2:49 p.m. EST (1949 GMT) against $1,097.95 late in New York on Monday.
COMEX gold futures for February delivery <GCG0> settled up $2.60 at $1,098.30 an ounce.
The China news and Obama's plans to limit banks' risk taking have weighed down on global markets in the past several sessions, sapping investor confidence about a nascent economic recovery.
Silver touched its lowest price since November, and platinum and palladium were down more than 3 percent during the day.
"This is definitely currency-driven," said Saxo Bank senior manager Ole Hansen. "There is a bit of a return to risk aversion currently, and that is bringing many of these commodities back to earth."
The dollar rose sharply against the euro after weaker-than-expected U.S. home prices data dented risk appetite. [
]The Federal Open Market Committee began a two day meeting Wednesday afternoon that was expected to yield few shifts in interest rate policy and was taking place as the U.S. Senate debates approving another term for Fed Chairman Ben Bernanke. <nFEDAHEAD>
Still traders were alert to any influence from the Fed on the dollar that could affect gold on Wednesday.
FLIMSY SUPPORT
On charts, gold bullion has been largely holding firm at its 100-day moving average at $1,088 an ounce, but traders said serious liquidation could hit the market if prices fall below major support between $1,080 and $1,085.
Platinum group metals fell on overall industrial weakness despite growing metal holdings in the U.S. exchange traded funds.
ETFS Platinum <PPLT.P> metals holdings rose 18 percent to 194,887 ounces as of Jan. 25, while ETFS Palladium <PALL.P> holdings climbed 43 percent to 399,925 ounces from previous session, according to ETF Securities.
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Platinum <XPT=> hit a low of $1,497 and was last at $1,531.50 an ounce versus $1,546.50. Palladium <XPD=> was at $425 an ounce versus $441, having earlier touched a low of $420.
Silver <XAG=> fell to a low of $16.29, its weakest since Nov. 3. It was last at $16.77 an ounce versus $17.12.
Close Change Pct 2009 YTD
Chg Close % Chg US gold <GCG0> 1098.30 2.6 0.2 1096.20 0.2 US silver <SIH0> 16.860 -0.285 -1.7 16.845 0.1 US platinum <PLJ0> 1531.30 -14.80 -1.0 1471.00 4.1 US palladium <PAH0> 427.55 -12.45 -2.8 408.85 4.6 Prices at 3:10 p.m. EST (2010 GMT) Gold <XAU=> 1099.60 1.65 0.2 1096.35 0.3 Silver <XAG=> 16.78 -0.34 -2.0 16.84 -0.4 Platinum <XPT=> 1531.50 -15.00 -1.0 1465.50 4.5 Palladium <XPD=> 425.00 -16.000 -3.6 405.50 4.8 Gold Fix <XAUFIX=> 1093.25 2.50 0.2 1104 -1.0 Silver Fix <XAGFIX=> 16.79 -37.00 -2.2 16.99 -1.2 Platinum Fix <XPTFIX=> 1512.00 8.00 0.5 1466 3.1 Palladium Fix<XPDFIX=> 428.00 0.00 0.0 402 6.5 (Reporting by Frank Tang and Jan Harvey)