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PRECIOUS-Gold firms as U.S. tax reform uncertainty stokes risk aversion

* Gold rebounds after biggest drop in two weeks on Friday Equities pull back from record on U.S. tax plan jitters

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

(Updates throughout, adds LONDON dateline) LONDON, Nov 13 (Reuters) - Gold recouped some of the previous session's sharp price drop on Monday as uncertainty over a U.S. tax reform plan stoked risk aversion, pulling equities from their recent record highs. However, prices remained hemmed in a narrow range as investors awaited more clues on the path of U.S. interest rates.

Spot gold was up 0.2 percent at $1,278.40 an ounce at 1140 GMT, while U.S. gold futures for December delivery

were up $4.70 an ounce at $1,278.90. While the metal has been supported this year by geopolitical risks such as the North Korea's nuclear ambitions, a range of headwinds, from dollar strength to expectations for rising U.S. rates, have kept it pinned in a range around its 100-day moving average, at $1,277 currently. "There is a bit of safe-haven demand still supporting prices, but no new additional demand coming in, which means that prices aren't really moving," Capital Economics analyst Simona Gambarini said. "Geopolitical risks have been substantially higher in the second half of the year ... and there have been record highs in U.S. equities, (which are) probably starting to make some investors nervous." "I think some movement will come closer to the next Federal Reserve meeting in December," she added. "Most markets expect a rate hike ... that could be what prompts prices higher or lower, depending on what happens." Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. The metal fell 0.7 percent on Friday in its biggest one-day drop since Oct. 26, weighed down by a rise in U.S. Treasury bond yields. Yields rose, steepening the yield curve, as traders closed out some curve-flattener positions. The increase in yields helped the dollar rise on Monday. Stock markets took a step down, however, as uncertainty over a U.S. tax reform deal pushed world them further away from recent record highs. The head of the House of Representatives' tax-writing committee said on Sunday he would not accept elimination of a federal deduction for state and local taxes, opposing a proposal from Senate Republicans that would hike taxes for some middle class Americans. "U.S. tax reform and U.S.-North Korean relations remain present as upside shocks to the precious complex," MKS said in a note on Monday. "However, in lieu of major developments, it is difficult to see gold finding the support necessary for a move back toward USD $1,300 over the near term."

Among other precious metals, silver was flat at $16.89 an ounce. Platinum was up 0.6 percent to $931.30 an ounce and palladium was down 0.2 percent at $992.25.

(Additional reporting by Vijaykumar Vedala and Arpan Varghese in Bengaluru, editing by David Evans)