* Gold down 0.8 percent this week
* Investors braced for U.S. rate hike next week
* U.S. political uncertainty fuels safe haven demand
(Updates prices, recasts) LONDON, March 16 (Reuters) - Gold prices were set for their biggest weekly fall in a month on Friday, pushed lower by a stronger dollar and expectations that the U.S. Federal Reserve will raise interest rates next week for the first time this year. Losses were limited, however, by political tumult in the United States which fueled demand for bullion as a safe place to park assets. Higher interest rates are negative for gold because they push up bond yields, making non-yielding bullion less attractive, and tend to strengthen the dollar, making gold more expensive for users of other currencies.
Spot gold was down 0.2 percent at $1,312.90 an ounce
at 1558 GMT. It was on track to end the week down 0.8 percent and close at its lowest level since early January.
U.S. gold futures for April delivery were 0.4
percent lower at $1,313 an ounce. Gold has tended in recent years to fall before U.S. interest rises and rally afterwards. "It's a rates play," said Robin Bhar, head of metals research at Societe Generale. "Gold is now testing support towards $1,300 and may break it, but once the Fed announces it will raise rates, gold will likely rebound." Technical support for gold was at its 100-day moving average around $1,304, the psychologically important level of $1,300 and the 200-day moving average at $1,290. Prices were supported, however, by deepening U.S. political uncertainty and fears that U.S. tariffs aluminum and steel could disrupt global trade. The Washington Post reported on Thursday that Donald Trump's national security adviser, H.R. McMaster, would become the latest senior official to leave his post, while the New York Times said U.S. Special Counsel Robert Mueller had issued a subpoena for documents related to Trump's businesses.
"There is a lot of confusion in the market about what the White House's strategy is on any large macro issues," said Mitsubishi Analyst Jonathan Butler. "These factors should keep gold above $1,300, but it's more of a holding pattern and a generally supportive environment than something that is going to raise prices significantly." A diplomatic crisis between Russia and Britain over the poisoning of a former Russian double agent on English soil only underlined the appeal of gold, traditionally seen as a safe investment in times of uncertainty.
Among other precious metals, silver was down 0.6 percent at $16.27 an ounce, platinum 0.9 percent lower at $946.20 an ounce and palladium was up 0.2 percent at
$988.20 an ounce.
(Additional reporting by Nallur Sethuraman and Arpan Varghese in Bengaluru Editing by Mark Heinrich)