PRECIOUS-Gold prices drop 1% on dollar strength as Fed meeting looms

* Specs reduce gold bullish positions in week ended June 8- CFTC

* Dollar hovers near one-week high (Recasts, adds comments, and updates prices)

June 14 (Reuters) - Gold fell nearly 1% on Monday to its lowest in more than a week, weighed down by a stronger dollar, while investors awaited the outcome of the U.S. Federal Reserve policy meeting due this week with recent spikes in consumer prices seen as a temporary blip.

Spot gold was down 0.9% at $1,860.44 per ounce, as of 0654 GMT, its lowest since June 4. U.S. gold futures fell 0.9% to $1,862.20.

“The market is starting to anticipate maybe a modest pivot towards discussing taper and it’s sending investors into more of an either profit-taking or reducing gold and also currency positions,” said Stephen Innes, managing partner at SPI Asset Management.

As a result, the dollar has also gotten a little bit stronger, Innes said, adding that the inflation pressures are at a state that they may not last.

The dollar held firm near a one-week high against its rivals, making gold more expensive for holders of other currencies.

Last week, data showed a sharp rise in May U.S. consumer prices. But Fed officials have repeatedly said that inflation would be transitory.

Focus now shifts to the Fed’s June 15-16 meeting for further clarity on policymakers’ view on rising inflation and monetary policy going forward.

“The price action suggests that the speculative market was heavily long (on gold), as of Friday and that the culling of positioning continues in Asia today,” Jeffrey Halley, senior market analyst at OANDA, said in a note.

“Gold has support at $1,856 an ounce, but the $1840 to $1845 zone must hold to keep the bullish case on track.”

Speculators reduced their net long positions in COMEX gold in the week ended June 8 and raised their net long positions in silver.

Silver fell 0.4% to $27.78 per ounce, palladium dropped 0.5% to $2,762.44, while platinum dipped 0.6% to $1,142.84. (Reporting by Brijesh Patel in Bengaluru, Editing by Sherry Jacob-Phillips and Rashmi Aich)