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PRECIOUS-Gold above $1,300/oz on U.S. election fears, Fed holds rates

* Fed holds interest rates steady after two-day meeting
    * Silver and platinum at 1-month highs
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Recasts to include Fed statement, updates prices; adds
comment, second byline, NEW YORK dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, Nov 2 (Reuters) - Gold rallied to a
one-month high on Wednesday, as uncertainty over the outcome of
the U.S. election knocked stocks and the dollar lower, but
bullion pared gains slightly after the Federal Reserve held
interest rates steady as expected.
    Following a two-day meeting, the Fed signaled it could hike
rates in December as the economy gathers momentum and inflation
picks up. Two policymakers dissented in the decision in favor of
an immediate hike, down from three in September. 
    Spot gold rose to $1,307.76 an ounce, its highest
since Oct. 4, and was up 1.05 percent at $1,301.36 by 3:05 p.m.
EDT (1905 GMT). U.S. gold futures for December delivery 
settled up 1.6 percent at $1,308.20 per ounce.
    "The Fed, as expected, gave the election wide berth
providing a modestly more hawkish statement which may have
mollified Boston Fed President Rosengren enough to prevent a
second consecutive dissent," said Tai Wong, director of base and
precious metals trading for BMO Capital Markets in New York.
    "Gold and silver are marginally off their highs after recent
sharp gains as the Fed refrains from further inflaming electoral
anxiety."
    Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
and also boost the dollar, making the metal more expensive for
those holding other currencies. 
    "In a minor but perhaps indicative shift, the statement
suggested that the Fed is now only waiting for 'some' further
evidence of progress," said Royce Mendes, director and senior
economist at CIBC Capital Markets in Toronto.
    Gold prices were strong ahead of the Fed statement as
investor anxiety over the election after the renewal of an FBI
probe into Democratic candidate Hillary Clinton's emails knocked
global equity prices and the U.S. dollar lower for the
second straight day. 
    Traders were starting to reconsider long-held bets of a
victory for Clinton amid signs Republican Donald Trump could be
closing the gap after the FBI's announcement of the new email
probe on Friday. 
    The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Shares, reported its first inflow in just
over a week on Tuesday. 
    Among other precious metals, silver was up 1.4
percent at $18.58 an ounce, after reaching $18.74, its highest
since Oct. 4.
    Platinum was up 0.4 percent at $994, after climbing
to a one-month high at $1,001.80. Palladium was down 0.8
pct at $626.97.

    
 (Additional reporting by Apeksha Nair and Nallur Sethuraman in
Bengaluru; editing by David Evans  and Marguerita Choy)
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