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PRECIOUS-Gold falls 1 pct, hits 3-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

(New throughout, updates prices and market activity following Fed meeting) 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 tighten credit 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 saw the "appropriate" benchmark U.S. interest rate at between 1.25 percent and 1.50 percent by the end of 2017. "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 1 percent at $1,298.1 an ounce by 2:37 p.m. EDT (1837 GMT)). It retraced losses and within about 15 minutes was 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. "Investors seem to be locked into round numbers like that." Denbow noted that other central banks around the world had been reducing economic stimulus or tightening policy, and would be watching the outcome of the Fed meeting. Klearman said gold was sensitive to rate hikes because they increase bond yields, making non-yielding assets such as bullion less attractive. Rising U.S. rates also tend to boost the dollar, in which gold is priced.

Spot silver was down 1.66 percent at $17.033 an ounce, while platinum fell 1.18 pct at $936.80 per ounce. Palladium was up 0.32 pct at $911.40 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 ounce.

(Additional reporting by Apeksha Nair in Bengaluru,; Editing by Louise Heavens and Richard Chang)