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PRECIOUS-Gold extends gains after Fed holds interest rates steady

* Federal Open Market Committee leaves rates unchanged
    * Dollar gives up earlier gains after Fed statement
    * Platinum, palladium rally to 2015 highs

 (Recasts; updates prices, adds comment, byline, NEW YORK
dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, July 27 (Reuters) - Gold extended its climb
above $1,330 an ounce on Wednesday after the U.S. Federal
Reserve left interest rates unchanged as expected and the dollar
pared gains against a basket of major currencies.
    The U.S. central bank said in a statement following its
two-day meeting that near-term risks to the U.S. economic
outlook had diminished, opening the door to a resumption of
monetary policy tightening this year. 
    Spot gold was up 0.9 percent at $1,331.20 an ounce by
2:42 p.m. EDT (1842 GMT). U.S. gold futures for August
delivery settled up 0.45 percent at $1,326.70.
    "Gold has defied the marginally hawkish tone of the FOMC
statement turning higher and pushing for a close above $1,335,
which could prophesy the return of bullish sentiment," said Tai
Wong, director of base and precious metals trading for BMO
Capital Markets in New York.
    Gold is particularly sensitive to rising U.S. rates, which
would lift the opportunity cost of holding non-yielding bullion,
while boosting the dollar, in which it is priced.
    The dollar, which was buoyed earlier by reports of a larger
than previously expected fiscal stimulus plan for Japan that
knocked the yen lower, gave back its gains against a basket of
currencies.
    "Our economists are expecting a rate hike in December, but
if the Fed starts to sound hawkish now, that could weigh on
gold," UBS analyst Joni Teves said before the statement was
released. "There are downside risks here."
    Uncertainty over the path of U.S. rates has eroded nearly 50
percent of the gains gold has made since UK voters shocked
global markets last month by voting to leave the European Union.
    "Gold's insurance benefits come at a price on these levels,"
Julius Baer said in a research note. "While Brexit-related
uncertainty should be supportive for prices in the short term,
the market appears too complacent with U.S. monetary policy."
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares have seen an outflow of nearly 28
tonnes in the last three weeks. 
    Among other precious metals, spot platinum surged as
much as 3.1 percent to $1,125.80 per ounce, the highest in
nearly 14 months, extending gains after the Fed statement.
    Palladium has risen every day this week, following
five straight weeks of gains. On Wednesday, it climbed to a
9-1/2-month high, firming by as much as 2.3 percent to $702.50
an ounce.
    Silver was up 2.43 percent at $20.10 an ounce.

 (Additional reporting by Nallur Sethuraman and Vijaykumar
Vedala in Bengaluru; editing by Susan Thomas, G Crosse)
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