PRECIOUS-Gold slips 1 pct on prospects of U.S. Fed tapering soon
* Summers drops out of race for Fed chairman
* U.S. dollar falls to near four-week low
* Fed Sept 17-18 meeting main focus
LONDON, Sept 16 (Reuters) - Gold fell around one percent on Monday, with markets expecting the Federal Reserve to begin tapering its commodity-boosting monetary stimulus as soon as this month despite the withdrawal of Lawrence Summers from the race to head the U.S. central bank.
The consensus is that the Fed will initially reduce its bond purchases, now $85 billion a month, by $10 billion and will announce the reduction to its quantitative easing (QE) after a Sept. 17-18 meeting.
The withdrawal of former U.S. Treasury Secretary Summers from the Fed race could suggest a more gradual approach to tightening monetary policy, with potential front-runner Janet Yellen perceived as a more dovish contender.
The news sent the dollar to a near-four-week low against a basket of currencies, and European shares to five-year highs but it had limited impact on gold, which rose nearly $10 an ounce before giving up gains.
Spot gold fell by as much as 1.2 percent to a session low of $1,310.04 an ounce earlier and was trading at $1,311.76, down 1.1 percent by 1202 GMT. It posted its steepest weekly drop in more than two months last week, falling by 4.6 percent.
"Summers is out of the race, Yellen is now the front-runner but with two days before the big Fed decision I don't think this is going to alter the tapering plans," Societe Generale analyst Robin Bhar said.
"Although the Fed will do anything to minimise the impact, it will have to start tapering this month otherwise it will be in for a lot of criticism," Bhar added.
Bullion prices have lost 19 percent this year after the Fed signalled it would start reining in nearly five years of QE that had weighed on the dollar and encouraged investors to buy hard and non-interest-bearing assets such as gold.
"I suspect we will stay between $1,300 and $1,350 for the next couple of days ahead of the (Fed) meeting and then we will see what happens," Marex Spectron trader David Govett said in a note.
INVESTOR SENTIMENT BEARISH
Easing geopolitical tensions in Syria also hurt gold's safe-haven appeal on Monday.
The United States agreed to call off military action against Syria under a deal with Russia to remove President Bashar al-Assad's chemical weapons stockpile.
Hedge funds and money managers slashed bullish bets in futures and options in the U.S. gold market for the first time in five weeks, a weekly report by the Commodity Futures Trading Commission showed on Friday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.66 percent to 911.12 tonnes on Friday, the biggest decline since Aug. 1.
In other precious metals, spot silver, which fell to a one-month low of $21.35 an ounce on Friday, mirrored gold's moves and was trading down 1.9 percent at $21.79. It lost nearly 7 percent last week, its biggest weekly loss since mid-June.
Spot platinum fell 0.9 percent to $1,437.24 an ounce, while spot palladium rose 0.6 percent to $700.72 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Dale Hudson and James Jukwey)