PRECIOUS-Gold hits two-week low as Abe election victory lifts dollar

* Yen falls vs dollar on bets 'Abenomics' here to stay

* Specs cut net longs in gold for fifth straight week

* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl

(Updates throughout, adds LONDON dateline) LONDON, Oct 23 (Reuters) - Gold hit its lowest in more than two weeks on Monday as expectations that Japan's ultra-loose monetary policy would stay in place after Shinzo Abe's election victory at the weekend lifted the dollar to a three-month high versus the yen. Japanese Prime Minister Abe's win also fed into positive sentiment in equity markets that were buoyed last week by fresh optimism about tax cuts in the United States, curbing interest in gold as an alternative asset.

Spot gold was down 0.4 percent at $1,275.30 an ounce $1,273.61. U.S. gold futures for December delivery were

down $4.10 at $1,276.40. "(Gold) is just following what the dollar is doing," said Natixis analyst Bernard Dahdah. "People are also getting more excited about the stock markets, and that removes a bit of business from gold." The metal could drift down towards the $1,250 level by early December, he said, weighed down by the prospect of a further increase to U.S. interest rates in December. Gold is highly sensitive to rising U.S. rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. The dollar had already posted its biggest one-day gain in a month on Friday after the U.S. Senate approved a budget blueprint for the 2018 financial year, allowing Republicans to pursue a tax-cut package without Democratic support.

Financial markets are now awaiting guidance on who will succeed Federal Reserve chair Janet Yellen, whose term expires in February. U.S. President Donald Trump is considering nominating Fed Governor Jerome Powell and Stanford University economist John Taylor for the central bank's top two jobs. Powell is considered less hawkish than Taylor, who is seen advocating higher interest rates. "As the path toward tax reform in the U.S. begins to take shape and the identity of next Fed Chair becomes clearer, we are likely to see the U.S. dollar strengthen further against majors," MKS said in a note on Monday. "Tensions on the Korean peninsula, however, continue to weigh upon participants' minds and as a result we are likely to see interest towards $1,250 restrict further (gold) declines." Hedge funds and money managers cut net long positions in COMEX gold contracts for the fifth straight week in the week to Oct. 17, U.S. data showed on Friday.

Among other precious metals, silver eased by 0.3 percent to $16.94 an ounce, platinum was down 0.8 percent at $913 and palladium dipped by 1.2 percent to $963.

(Additional reporting by Apeksha Nair in Bengaluru; Editing by David Goodman)