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PRECIOUS-Gold slides 1 pct as dollar gains ahead of Fed meeting

* Dollar near eight-week high against yen

* Fed expected to unveil plans to trim balance sheet

* World stock index hits record but gold stocks fall

(New throughout, updates prices, market activity and analyst comment; adds gold stocks fall, Kinross spending plans; adds byline, changes dateline, previous LONDON) LONDON/NEW YORK, Sept 18 (Reuters) - Gold fell 1 percent on Monday, touching a 2-1/2-week low, as the dollar strengthened and U.S. Treasury yields rose ahead of a two-day Federal Reserve meeting, while a world stock market index surged to a record and Wall Street also hit new highs. Easing tensions on the Korean peninsula also reduced gold's safe-haven bid. On Sept. 8, gold's session high of $1,357.54 an ounce was the highest in 13 months. On Friday, U.S. data showed hedge funds and other speculators had raised net long positions in the precious metal for nine straight weeks. "There was a lot of speculative froth in the gold market which seems to have receded now," Commerzbank analyst Carsten Fritsch said in a telephone interview. "Expectations that the Fed will raise U.S. interest rates argue for a correction here." Spot gold was down 1.04 pct at $1,305.46/oz by 2:05 p.m. EDT

(18:05 GMT). The most active U.S. gold futures for

December delivery settled down $14.40, or 1.09 percent, at $1,310.8 per ounce.

Spot silver was down 2.63 pct at $17.117/oz, while platinum fell 0.99 pct to $954.5/oz. Palladium was

up 1.42 pct at $936.1/oz. The dollar hit an eight-week high against the yen, as investors increased bets the Fed could raise interest rates in December. Fed policy makers meet Tuesday and Wednesday. Investors expect the Fed will announce plans to start trimming its balance sheet, which should support the dollar and weigh on dollar-priced gold.

World stocks hit a record high. But shares of gold mining companies fell sharply. U.S. Treasury

yields rose. "Gold doesn't do well in a high rate environment," INTL FCStone analyst Edward Meir said in a telephone interview, noting that central banks have been tightening or moving toward tightening in Canada, England, Europe and the United States. Gold's slide on Monday did not bring it as low as $1,300 an ounce. Meir said gold's support level on the charts was around $1,280 an oz while the $1,300 level "is more psychological." Investors grew less worried about tensions on the Korean peninsula. Chinese President Xi Jinping and U.S. President Donald Trump spoke about pressuring North Korea with economic sanctions imposed through the United Nations, the White House said. Trump addresses world leaders at the United Nations on Tuesday.

Kinross Gold Corp gave the go-ahead to spend more

than $1 billion to expand two of its gold mines, including its Tasiast mine in West Africa.

(editing by Jonathan Oatis)