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PRECIOUS-Gold loses luster, falls from 1-month high as Fed meets

* Fed begins two-day monetary policy meeting

* Spot silver at three-week high of $16.64/oz

(Recasts; updates prices; adds comment, byline, NEW YORK dateline) NEW YORK/JOHANNESBURG, July 25 (Reuters) - Gold prices retreated from a one-month high on Tuesday as equities gained and the markets awaited clues about monetary policy from the U.S. Federal Reserve, which began its two-day meeting. The market is not expecting an interest rate increase following the Fed's two-day meeting, but it is looking for hints on the timing and extent of future moves.

Spot gold was down 0.2 percent at $1,251.90 an ounce

peak of $1,258.79, its highest since June 23.

U.S. gold futures settled down 0.2 percent at

$1,252.10. "The market is looking for clarity on the Fed's tightening cycle and when they are going to start with the tapering (of monetary stimulus)," said ETF Securities analyst Martin Arnold. Taking the shine off gold slightly, investors climbed into European and U.S. equities after a string of solid corporate reports. The U.S. dollar rebounded above a 13-month low against a basket of currencies. Markets give a 48 percent probability of a U.S. interest rate increase before the end of the year, according to CME's Fedwatch tool. U.S. single-family home prices accelerated at a slower pace in April, falling short of forecasts, while the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rose 5.7 percent in May on a year-over-year basis. "Today's Housing Price Index and S&P/Case-Shiller Home Price Indices came in lower than expectations. This indicates no inflation, which the Fed is eyeing," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York. "If there is no inflation, the Fed is likely to stay its hand at raising too soon, raising doubts." Hurdles standing in the way of U.S. President Donald Trump's economic stimulus and tax reform agenda provided some support to bullion, keeping in near the prior session's one-month top. "There is a dual-pronged attraction to gold at the moment, with low interest rates and investors looking at the metal as a hedge against U.S. political uncertainty," Arnold said. Gold is often seen as an alternative investment during times of political and financial uncertainty.

In other precious metals, silver rose 0.6 percent to

$16.54 an ounce after hitting its highest since July 3 at $16.64, holding just below the 50-day moving average at $16.65.

Platinum rose 0.6 percent to $930.60. In the previous

session it touched $940.40, its highest in more than five weeks.

Palladium advanced 1 percent to $856.80.

(Additional reporting by Nithin Prasad and Arpan Varghese in Bengaluru; editing by David Clarke and Diane Craft)