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Gold ticked up on Tuesday on concerns surrounding the U.S. banking crisis and debt ceiling negotiations, while traders also braced for clues on the path of interest rates from the U.S. Federal Reserve's policy meeting.

Spot gold rose 0.2% to $1,986.53 per ounce by 1241 GMT while U.S. gold futures inched up 0.1% to $1,994.70.

The Federal Open Market Committee's two-day meeting starts later in the day, where it is widely expected to raise rates by 25 basis points.

Gold has been trading fairly steady ahead of the Fed meeting, also supported by some safe-haven demand from the resurgence of worries over the banking sector's health as well as U.S. debt ceiling uncertainty, Bank of China International analyst Xiao Fu said.

U.S. President Joe Biden on Monday summoned the four top congressional leaders to the White House next week after Treasury Secretary Janet Yellen warned the government could run short of cash to pay its bills by June.

Gold clocked a more than 1% gain in April amid the U.S. banking crisis and briefly rose above $2,000 on Monday after regulators seized sold First Republic Bank's assets to JPMorgan Chase & Co, in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis.

While gold is considered a hedge against economic uncertainties, rising rates hurt demand for the zero-yielding asset.

Separately, any unexpected outcome from the European Central Bank meeting on Thursday, which is expected to conclude with a 25bp rate hike may influence the euro, and in turn the dollar, and trickle down to gold, said Lukman Otunuga, senior research analyst at FXTM.

Elsewhere, spot silver fell 1% to $24.72 per ounce, platinum was down 0.6% at $1,043.51 and palladium fell 0.2% to $1,448.34 per ounce.