* U.S. Fed is expected to keep rates on hold this week

* Spot gold may rise into $2,019-$2,036 range - technicals

* U.S. consumer spending exits third quarter on strong note

Oct 30 (Reuters) - Gold prices slipped from the key $2,000 level on Monday, as investors positioned cautiously ahead of the U.S. Federal Reserve's policy meeting this week, while safe-haven demand due to the Middle East conflict provided a floor.

Spot gold was down 0.6% at $1,993.71 per ounce by 0936 GMT. U.S. gold futures rose 0.3% to $2,003.50.

Spot gold prices hit $2,009.29 an ounce on Friday, surpassing the key psychological $2,000 level for the first time since mid-May, as investors piled into safe-haven bullion.

Gold shot up on Friday on "the brink of a major geopolitical event... but I think (the) market has digested (that) the ground invasion (by Israel) of Gaza will continue and because of that we've seen some bit of profit-taking today," said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.

Monday's downward move was not a change of trend but "any major ceasefire can erode the (risk) premium by $30 to $50 in gold. Barring that, we don't see any major downside in gold," Shah added.

Palestinians in Gaza reported fierce air and artillery strikes early on Monday as Israeli troops backed by tanks pressed into the enclave with a ground assault.

Market participants now look towards the U.S. central bank's policy decision due on Wednesday. While the Fed is widely expected to keep interest rates unchanged, the focus will be on Chair Jerome Powell's commentary.

"The spate of strong economic data means it will force the Fed to retain a hawkish undertone, despite raising concerns over the Middle East conflict," City Index senior analyst Matt Simpson said.

Inflation pressures will dog the world economy next year, a Reuters poll showed, suggesting interest rates will also remain higher for longer.

Although gold is seen as a hedge against inflation, higher interest rates dull non-yielding bullion's appeal.

Spot silver was flat at $23.14, platinum rose 1.3% to $915.15 and palladium rose 1.1% to $1,134.45.

(Reporting by Harshit Verma in Bengaluru; Editing by Emelia Sithole-Matarise)