SINGAPORE (Reuters) - Gold edged up on Tuesday as bargain hunters resurfaced after the price dropped to its weakest in almost a week the previous day, although a firm U.S. dollar looked set to limit gains. Worries that speculators who have built up extremely long positions in New York would liquidate, plus the impact of the IMF's plan to sell gold, were still at the back of investors' minds, but lower prices could also attract buying from jewelers. Trading was muted in Asia, with Japanese investors away on holiday, while the movement of the dollar ahead of a Federal Reserve monetary policy meet, and a Group of 20 summit, were likely to set the tone for gold prices. Gold was quoted at $1,005.85 an ounce, up $3.30 from New York's notional close on Monday, when a rally in the dollar dragged it down to $995.50, its lowest since September 15, in volatile trade. "It isn't surprising to see, when we do get a little bit of uncertainty, that people take profits off the tables," said Darren Heathcote, head of trading at Investec Australia in Sydney. "But generally, for the moment, the trend looks like it's still continuing upwards. And I guess as we head toward the wedding season, the physical demand is going to pick up as well." Bullion was nearly 2 percent below last week's 18-month high of $1,023.85 an ounce after attempts to breach last year's record around $1,030 an ounce were foiled by profit-taking. But lower prices could attract buying from main consumer India, where weddings take place during the current festive season, which peaks in October with Diwali, the Hindu festival of lights. The euro stood $1.4689 on Tuesday, having fallen to as low as $1.4606 the previous day. Major currencies may be subdued against the dollar as markets await the outcome of the G20 meeting and the Federal Reserve's policy meeting on Wednesday. The Federal Open Market Committee is expected to hold rates steady but markets want to know if there are signs that the super-accommodative policy stance will be wound back, given a recent pick up in economic data. "Of course, the dollar is giving gold some pressure, but still we are seeing some physical buying around," said a dealer in Hong Kong, referring to bargain buying from jewelers and the electronic sector. U.S. gold futures for December delivery added $2.20 an ounce at $1,007.10 on the COMEX division of the New York Mercantile Exchange, having dropped to a near 1-week low of $996.3 on Monday on worries about fund selling. The noncommercial net long position in gold futures on the COMEX division of the New York Mercantile Exchange stood at an all-time high of 235,647 lots for the week ended September 15, data from the Commodity Futures Trading Commission showed. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,101.735 tonnes as of Sept 21, up from 1,086.479 tonnes the previous day.

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