PRECIOUS-Gold rises to near 13-month high as dollar turns lower

* Expectations for March rate hike still low, aiding gold

* Hedge funds cut bullish bets in COMEX gold

* Platinum above $1,000/oz for 1st time in more than 4 months

* Gold/platinum ratio: (Updates prices; adds comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, March 7 (Reuters) - Gold rose on Monday, hovering just below last week’s 13-month high as the U.S. dollar turned lower, while a fall in average U.S. earnings lessened expectations the Federal Reserve could raise interest rates at its next policy meeting.

Spot gold was up 0.6 percent at $1,266.70 an ounce by 3:12 p.m. EST (2012 GMT). The metal had peaked at $1,279.60 on Friday, its strongest since February 2015, before slipping on U.S. data.

U.S. gold futures for April delivery settled down 0.5 percent at $1,264 per ounce.

A pitched battle over the right path for U.S. interest rates is expected at next week’s Fed policy-setting meeting.

On Monday, the internal battle lines at the Fed were in full view as two of the central bank’s most influential policymakers delivered dueling reads on the U.S. economy and the appropriate monetary policy response in simultaneous appearances.

A low interest rate environment encourages investors to put money into non-interest bearing assets such as gold.

Bullion prices were firm even as U.S. stocks extended recent gains as investors’ appetite for gold maintained its momentum after prices rallied nearly 20 percent in 2016 so far. The U.S. dollar gained earlier but turned lower.

“Gold is catching a safe-haven bid and that’s enabling it to maintain strength at the same time the dollar is strong,” said Joe Foster, portfolio manager and strategist of VanEck International Investors Gold Fund in New York, when the dollar was in positive territory against a basket of major currencies.

“People are starting to get nervous about the financial system and financial risk.”

Flows into bullion-backed exchange-traded funds (ETFs) dropped slightly on Friday but remained at multi-year highs.

“So far the rally in gold has been based on the re-pricing of a Fed rate hike (which) the market expects to be delayed for some time, in contrast to the view at the beginning of the year that the Fed could hike again as soon as March,” Danske Bank senior analyst Jens Pedersen said.

Platinum surpassed the $1,000 an ounce mark for the first time in more than four months, rising as much as 3 percent at $1,008.64 an ounce. Its discount to gold dropped to $266, compared with Friday’s record high above $320.

Palladium also had a strong day and rose 4.2 percent to $578.50 an ounce, the highest since Nov. 12.

Spot silver rose 0.9 percent to 15.63 an ounce.