PRECIOUS-Gold falls 1 pct, hits three-week low after Fed statement

    * Gold slides to lowest since Aug. 28
    * Fed keeps rates steady, will trim portfolio
    * Fed signals it expects rate hike by year-end

 (Updates prices; adds details on markets, comment about net
    By Dave Gregorio and Peter Hobson
    NEW YORK/LONDON, Sept 20 (Reuters) - Gold prices fell 1
percent on Wednesday after the U.S. Federal Reserve left
interest rates unchanged but signaled it still expected to raise
interest rates by year-end.
    Gold had been creeping higher in the minutes before the Fed
released a statement about its latest two-day policy meeting,
then reversed course and fell. It briefly sank below the $1,300
mark that traders had viewed as psychological support. Bullion
hit $1,295.81 an ounce, the lowest since Aug. 28.
    As expected, the Fed also said it would start to reduce the
portfolio of Treasuries and mortgages it acquired through its
quantitative easing (QE) program after the financial crisis. New
projections after the Fed meeting showed 11 of 16 officials
favored higher benchmark U.S. interest rates by year-end. 
    "The Fed came out and said they were going to do their QE 
reversal of about $10 billion a month; they still expect a Fed
rate hike in December and three more in 2018. This puts a little
pressure on gold," said Jeff Klearman, portfolio manager at
GraniteShares, a provider and manager of exchange traded funds.
    Spot gold was down 0.76 percent at $1,301.2 an ounce by 3:55
p.m. EDT (1955 GMT), trading back above the $1,300 level.
    "The natural resistance is that hard number of $1,300," said
Dan Denbow, portfolio manager at USAA Precious Metals and
Minerals Fund.
    Benchmark U.S. Treasury yields jumped to their highest in
six weeks, while Wall Street stocks fell after the Fed meeting.
    The dollar turned higher against a basket of currencies,
reversing an earlier drop.      
    Bill O'Neill, co-founder of Logic Advisors, noted that
speculative investors had added to their net long position in
gold for nine straight weeks, making the market vulnerable to
more selling.
    "A number of them are underwater so they're already in a
losing mode," he said, adding that if gold slips much more "that
would add a significant number of very weak longs in the
market." He said gold selling could intensify if U.S. Treasury
yields rise more or the dollar strengthens further.
    Rising bond yields make non-yielding assets such as bullion
less attractive. A rising dollar also tends to hurt the value of
    Spot silver        was down 1.27 percent at $17.10 an ounce,
while platinum        fell 0.63 percent at $942 an ounce.
Palladium        was up 0.39 pct at $912 an ounce.      
    The most active U.S. gold         futures for December
delivery settled up $5.80, or 0.44 percent, at $1,316.40 per

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Richard Chang and Lisa Shumaker)