* US consumer spending beats expectations in September

* Platinum, palladium set for weekly gains; silver seen down

Oct 27 (Reuters) - Gold prices held steady on Friday, supported by continued safe-haven demand fuelled by Middle East tensions, while investors awaited the U.S. Federal Reserve policy meeting due next week.

Spot gold was down 0.2% at $1,980.35 per ounce by 9:22 a.m. ET (1322 GMT). U.S. gold futures fell 0.4% to $1,989.60. Prices held steady for the week.

"Gold has been consolidating in a very tight range holding nearly all of its recent gains as market remains extremely concerned about a conflagration in the Middle East," said Tai Wong, a New York-based independent metals trader.

Israeli forces carried out their biggest Gaza ground attack in their 20-day-old war with Hamas overnight as Arab nations condemned the bombardment. Safe-haven bullion has gained around 8% or more than $140, since the start of the war on Oct. 7.

"If there is an escalation in the conflict, there are prospects of additional safe-haven buying ... Gold investors will also be watching the outlook for U.S. Treasury yields," said Daniel Ghali, commodity strategist at TD Securities.

The Federal Open Market Committee meeting is due on Oct. 31-Nov. 1, with traders expecting a 98% chance of the U.S. central bank leaving rates unchanged.

"In our view the Fed will most likely end its tightening campaign and this is already priced into the gold market," Ghali added.

Data showed U.S. consumer spending increased more than expected in September, keeping it on a higher growth path heading into the fourth quarter.

In the physical market, purchases of gold during a major festival in India improved this week, albeit at a slower pace compared to last year, as domestic prices were sitting at near-record highs.

Spot silver fell 0.1% to $22.81 per ounce and was set for a weekly fall.

Platinum climbed 0.4% to $903.95 and palladium gained 0.4% to $1,137.62, with both metals on track for weekly gains.

(Reporting by Ashitha Shivaprasad in Bengaluru; editing by David Evans)