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PRECIOUS-Gold loses luster, falls from 1-month high as Fed meets

    * Fed begins two-day monetary policy meeting
    * Spot silver at three-week high of $16.64/oz

 (Recasts; updates prices; adds comment, byline, NEW YORK
dateline)
    By Marcy Nicholson and Zandi Shabalala
    NEW YORK/JOHANNESBURG, July 25 (Reuters) - Gold prices
retreated from a one-month high on Tuesday as equities gained
and the markets awaited clues about monetary policy from the
U.S. Federal Reserve, which began its two-day meeting.
    The market is not expecting an interest rate increase
following the Fed's two-day meeting, but it is looking for hints
on the timing and extent of future moves.
                       
    Spot gold        was down 0.2 percent at $1,251.90 an ounce
by 1:50 p.m. EDT (1750 GMT), not far from the previous session's
peak of $1,258.79, its highest since June 23.
    U.S. gold futures         settled down 0.2 percent at
$1,252.10.
    "The market is looking for clarity on the Fed's tightening
cycle and when they are going to start with the tapering (of
monetary stimulus)," said ETF Securities analyst Martin Arnold.
    Taking the shine off gold slightly, investors climbed into
European and U.S. equities after a string of solid corporate
reports.            
    The U.S. dollar rebounded above a 13-month low against a
basket of currencies.       
    Markets give a 48 percent probability of a U.S. interest
rate increase before the end of the year, according to CME's
Fedwatch tool.             
    U.S. single-family home prices accelerated at a slower pace
in April, falling short of forecasts, while the S&P CoreLogic
Case-Shiller composite index of 20 metropolitan areas rose 5.7
percent in May on a year-over-year basis.             
    "Today's Housing Price Index and S&P/Case-Shiller Home Price
Indices came in lower than expectations. This indicates no
inflation, which the Fed is eyeing," said Miguel Perez-Santalla,
vice president of Heraeus Metal Management in New York.
    "If there is no inflation, the Fed is likely to stay its
hand at raising too soon, raising doubts." 
    Hurdles standing in the way of U.S. President Donald Trump's
economic stimulus and tax reform agenda provided some support to
bullion, keeping in near the prior session's one-month top.
    "There is a dual-pronged attraction to gold at the moment,
with low interest rates and investors looking at the metal as a
hedge against U.S. political uncertainty," Arnold said.
    Gold is often seen as an alternative investment during times
of political and financial uncertainty.
    In other precious metals, silver        rose 0.6 percent to
$16.54 an ounce after hitting its highest since July 3 at
$16.64, holding just below the 50-day moving average at $16.65.
    Platinum        rose 0.6 percent to $930.60. In the previous
session it touched $940.40, its highest in more than five weeks.
Palladium        advanced 1 percent to $856.80.

 (Additional reporting by Nithin Prasad and Arpan Varghese in
Bengaluru; editing by David Clarke and Diane Craft)
  
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