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PRECIOUS-Gold slips on firm dollar; market focuses on U.S. debate outcome

* First U.S. presidential debate will take place at 0100 GMT
Tuesday
    * Speculators cut net-long positions in COMEX gold for
second week

 (Adds comment, updates prices)
    By Swati Verma
    BENGALURU, Sept 26 (Reuters) - Gold prices edged lower on
Monday as the dollar firmed, though the market is focused on the
outcome of the U.S. presidential debate later in the day, that
could see investors buying more of the metal as a hedge against
financial uncertainty.
    Spot gold slipped 0.1 percent to $1,336 an ounce at
0719 GMT. U.S. gold futures slid 0.2 percent to $1,339.9
an ounce.
    "If Trump is perceived to have an improved probability of
winning the Presidential race, that is likely to be supportive
of the gold prices, so we could see (gold) prices rallying in
the short term amid higher volatility," said NAB analyst Vyanne
Lai.
    The first U.S. presidential debate between Republican Donald
Trump and Democrat Hillary Clinton will take place at 0100 GMT
on Tuesday, with investors looking for indications of who could
win the race to lead the world's biggest economy. 
    "With Trump closing the gap with Clinton, the uncertainty is
likely to keep gold underpinned," said Alex Thorndike, senior
precious metals dealer, MKS PAMP Group.
    The dollar index, which measures the greenback
against six major currencies, was up 0.05 percent at 95.521.
 
    "We expect gold to continue to hold its recent $1,330 -
$1,340 range in the lead up to the presidential debate," MKS
PAMP Group trader Sam Laughlin said in a separate note.
    Boston Federal Reserve President Eric Rosengren said on
Friday that he believed interest rates should be raised
gradually now and warned that a fall in the unemployment rate
below its sustainable level could derail economic recovery in
the United States. 
    The split at the Federal Reserve over when to next raise
interest rates appears to hinge largely on disagreements over
the labour market outlook, comments from policymakers on Friday
suggest. 
    Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
while boosting the dollar, in which it is priced.
    Speculators cut their net-long position in COMEX gold
futures for the second straight week in the week to Sept. 20,
U.S. Commodity Futures Trading Commission data showed. 
 
    Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 0.03 percent to 951.22
tonnes on Friday. 
    Silver fell 0.6 percent to $19.53 an ounce, after
dropping nearly 1 percent in the previous session.
    Platinum was down nearly 1 percent at $1,041 and
palladium fell 1 percent to $694 per ounce.
    

 (Reporting by Swati Verma and Nallur Sethuraman in Bengaluru;
Editing by Christian Schmollinger and Sherry Jacob-Phillips)
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