PRECIOUS-Gold firms on political concerns, softer dollar

    * Markets brace for first rate hike in 2018 next week 
    * Mueller investigation adds to U.S. political worries
    * SPDR Gold holdings rise 0.5 percent on Thursday

 (Recasts, adds quote and updates prices)
    By Sethuraman N R
    March 16 (Reuters) - Gold prices edged higher on Friday,
supported by a weaker dollar and safe-haven demand amid U.S.
political concerns and tensions between the United Kingdom and
    However, further gains were capped by expectations that the
U.S. Federal Reserve would raise interest rates at its policy
meeting next week.
    Spot gold        was up 0.2 percent at $1,317.97 per ounce
as of 0821 GMT. 
    U.S. gold futures         for April delivery were little
changed at $1,317.80.
    "As choppier markets seem likely, gold will remain a good
hedge against unexpected spikes in equity market volatility and
geopolitical tensions, in our view," UBS analysts said in a
    Growing U.S. political uncertainties following the recent
departure of two key officials, former Secretary of State Rex
Tillerson and top economic advisor Gary Cohn, from the Trump
administration have left investors worried.
    The dollar fell versus the yen on Friday, after a report
that U.S. President Donald Trump would remove his national
security adviser added to concerns about recent White House
personnel changes and what that meant for policy.       
    A weaker dollar makes bullion cheaper for holders of other
    Concerns over the investigation into the Trump Organization
also tested investor nerves, already frayed by fears U.S.
tariffs could hurt the global economy and trigger a trade war.
    U.S. Special Counsel Robert Mueller has subpoenaed the Trump
Organization for documents, including some related to Russia,
the New York Times reported on Thursday.             
    Meanwhile, Moscow said it would retaliate against London's
move to expel 23 Russian diplomats over a nerve toxin attack on
a Russian former double agent in Britain.             
    "Bullion continues to search for a catalyst to break out of
the recent range, and in lieu of such an event we expect the
metal to hold within $1,313 - $1,330, noting any extension lower
should meet strong support toward $1,300," MKS PAMP Group trader
Sam Laughlin said in a note.
    The Fed will begin its two-day rate-setting meeting on March
20, at which the U.S. central bank is expected to raise interest
rates for the first time this year.             
    "Investors are starting to focus on next week's Fed meeting,
which should be constructive for the dollar and bearish for
gold," said INTL FCStone.
    Gold is highly sensitive to rising U.S. interest rates,
because it becomes less attractive to investors since it does
not bear interest. 
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, rose 0.5 percent from a day
earlier to 838.15 tonnes on Thursday, marking the biggest inflow
since January.          
    Meanwhile, silver        rose 0.5 percent to $16.45 an
    Platinum        edged up 0.1 percent to $955.40, while
palladium        climbed 0.1 percent to $987.00.

 (Reporting by Nallur Sethuraman and Arpan Varghese in
Bengaluru; editing by Richard Pullin and Subhranshu Sahu)