PRECIOUS-Gold falls on strong dollar after GDP data, eyes on Fed

* Dollar index trades at highest since Sept.

* U.S. economy expands 4.0 percent in Q2

* Coming up: Fed statement after two-day meeting

(Updates prices, adds comment)

LONDON, July 30 (Reuters) - Gold fell on Wednesday, pressured by a multi-month high in the dollar following stronger-than-expected U.S. economic growth data and ahead of a Federal Reserve statement that could give hints on interest rate policy.

U.S. gross domestic product grew at a 4.0 percent annual rate as activity picked up broadly after shrinking at a revised 2.1 percent pace in the first quarter. Economists had forecast the economy growing at a 3.0 percent rate.

Spot gold, flat initially, fell 0.3 percent to $1,295.20 an ounce by 1452 GMT, after breaking below $1,300 in the previous session.

The metal was headed for a 2.2-percent monthly loss after a gain of around 6 percent in June, when international political tensions prompted investors to seek gold, often perceived as an insurance against risk.

U.S. gold futures were down 0.3 percent at $1,294.20 an ounce.

The dollar extended earlier gains to trade at 10-1/2 month highs against a basket of currencies, buoyed by strong data and as investors awaited a statement from the Federal Reserve's two-day policy meeting, due at 1800 GMT.

The surprise improvement in economic growth overshadowed a weak report on the labour market. U.S. companies hired 218,000 workers in July, below projections for a 230,000 jobs gain.

The next big focus will be the release of July non-farm payrolls data on Friday, which is expected to further signal the world's biggest economy is on a steady recovery path.

Recent strong economic data has raised speculation that the U.S. central bank may raise rates sooner than expected. Higher rates would encourage investors to withdraw money from non-interest-bearing assets such as gold.

"It should be priced in that the Fed is going to continue to reduce the volume of monthly bond purchases, but some market participants would like to get a little hint about the direction of interest rates," Quantitative Commodity Research director Peter Fertig said.

Prices have remained in a $160 per ounce range since the start of the year, mostly trading between $1,250 and $1,320.

"We keep seeing rallies fade and then some good buying on the dips, meaning the prices are extremely elastic and volatility is low," Sharps Pixley CEO Ross Norman said.

"A similar situation occurred in the 1990s. But those years were followed by the 2000s, which were characterised by a series of new initiatives, including the launch of exchange-traded funds and the liberalisation of the Chinese market. That brought around a sevenfold increase in the gold price," he added. "I don't see that happening now."

Markets were also watching for any worsening of tensions in the Middle East and Ukraine.

The European Union and the United States on Tuesday announced further sanctions against Russia, in the strongest international action yet over Moscow's support for rebels in eastern Ukraine.

Israel knocked out Gaza's only power plant and pounded dozens of other high-profile targets on Tuesday, while Egyptian mediators prepared a revised proposal for halting the violence in the enclave.

Spot silver was down 0.2 percent at $20.51 an ounce. It touched a five-week low of $20.26 on Thursday.

Platinum rose 0.1 percent to $1,473.30 an ounce, while palladium was unchanged at $875.47 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Keiron Henderson)