PRECIOUS-Gold hits one-month high, eyes on Fed and dollar

    * Political turmoil reinforces concern over U.S. growth
    * Fed's two-day meeting starts Tuesday
    * U.S. dollar and Treasury yields rise

 (Recasts, updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, July 24 (Reuters) - Gold prices pared gains
as the U.S. dollar turned higher on Monday, after bullion rose
to a one-month high as political turmoil in the United States
boosted sentiment ahead of a Federal Reserve monetary policy
meeting this week.
    Spot gold        was flat at $1,254.45 an ounce by 3:40 p.m.
EDT (1940 GMT), having touched $1,258.79, its highest since June
23. U.S. gold futures         settled down 60 cents, or 0.05
percent, at $1,254.30.
    Investigations into alleged Russian meddling in the 2016
U.S. presidential election and whether there was collusion with
President Donald Trump's campaign are viewed as obstacles to the
Trump administration's plans to boost economic growth.       
    The U.S. dollar        rose from its lowest level in more
than a year, however, and U.S. Treasury yields            
climbed, as investors braced for possible hints from the Fed on
when the next interest rate hike is coming.            
    "The dollar and the decision on U.S. interest rates will be
a major driver this week," SP Angel analyst Sergey Raevskiy
said, adding that the market was also reacting to U.S. politics.
    A higher U.S. currency makes dollar-denominated gold more
expensive for holders of other currencies.
    "Recent rhetoric suggests a chance that an announcement on
balance-sheet reduction could come this week," Societe Generale
analysts said in a note.
    The Fed's two-day meeting ends on Wednesday with a statement
at 1800 GMT.
    "We now expect only one further rate hike this year, in
December. This provides a more positive backdrop for the
price of gold, which has recently resumed its inverse
relationship with the U.S. dollar," said Capital Economics in a
third-quarter note.
    "As a result, we have revised up our end-2017 forecast of
the gold price to $1,150 per ounce."
    In the physical market, traders are watching demand in
India, a leading gold consumer, after the government levied a 3
percent tax on gold from July 1.              
    However, a deputy governor of the Indian central bank said
that a ban on high-value banknotes since last November had
significantly boosted investment in financial products.
    "As a matter of comparison, the $1.27 billion invested in
financial assets in June would have bought roughly 1 million
ounces of gold," Investec analysts said in a note.
    Silver        gained 0.02 percent to $16.47 an ounce, after
rising to $16.59, the highest since July 3.
    Platinum        fell 0.3 percent to $930.40, after rising to
$940.40, the highest since June 15, and palladium        was up
0.7 percent at $850.75.

 (Additional reporting by Nithin Prasad and Arpan Varghese in
Bengaluru; Editing by David Goodman and James Dalgleish)