Sept 20 (Reuters) - Gold rose on Monday as fears about the solvency of Chinese property group Evergrande sparked a flight to safe-haven assets, but gains were capped by strength in the dollar ahead of the U.S. Federal Reserve’s policy meeting. Spot gold rose 0.5% to $1,762.66 per ounce by 1753 GMT. U.S. gold futures settled 0.8% higher at $1,765.40.

Investors are rushing to the safety of bonds as fears grow of a default by Evergrande, driving a drop in yields that is helping gold, said Bart Melek, head of commodity strategies at TD Securities.

“People are reacting to what’s happening in China but this week’s Fed’s meeting is also important. Anything suggesting a fairly earlier tapering would be out of consensus and that would mean a pretty significant correction in gold prices,” Melek said.

The Fed’s Open Market Committee meets on Sept. 21-22.

Gold is considered as a hedge against inflation and currency debasement likely resulting from the widespread stimulus. A hawkish move by the Fed would, hence, diminish gold’s appeal, while an eventual interest rate hike would also raise the opportunity cost of holding the non-interest bearing asset.

World shares were lower as investors fretted about the spillover risk to the global economy from Evergrande’s troubles.

“No doubt those fears of systemic risk ... may well be feeding into the market,” independent consultant Robin Bhar said. “We typically see flows into the dollar, into gold, into the yen when investors are worried.”

But denting gold’s appeal for holders of other currencies, the dollar index hit a near one-month high.

Silver fell 0.7% to $22.23 per ounce, its lowest since November 2020.

Platinum dropped 3.5% to $908.52 per ounce, while palladium shed 6.4%, the most since mid-June, to $1,888.24.

Prices of the auto catalysts are unlikely to rebound until the demand environment starts looking better, Melek said.