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PRECIOUS-Gold rises as US political uncertainty breeds risk-aversion

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(Corrects date in second paragraph to late June, not earlyJuly)

* Investors raise net longs in gold to 6-month high - CFTC

* Safe-haven Japanese yen, Swiss franc also strengthen

BENGALURU, Dec 24 - Gold prices climbed on Monday, holdingground near a six-month high hit last week, as investorsremained concerned about political uncertainty in the UnitedStates and global economic slowdown.

Spot gold XAU= was up 0.6 percent at $1,263.01 per ounce,as of 0856 GMT. The metal had hit its highest since late June at$1,266.40 on Thursday.

U.S. gold futures GCv1 were up 0.6 percent at $1,265.8 perounce.

A partial U.S. government shutdown was almost certain todrag through the Christmas holiday after the Senate adjourned onSaturday without breaking an impasse over President DonaldTrump's demand for more funds for a border wall.

Signs of political instability in the United States at atime when the global economy is weakening sent equities sliding,further boosting demand for gold. MKTS/GLOB

"Prices are likely to remain strong," said Kunal Shah, headof research at Nirmal Bang Commodities in Mumbai, India.

"Investors will start allocating some funds to goldconsidering that global growth is slowing and equity marketsremain muted. If one has to seek refuge in these ongoing crises,gold is a good option."

The Japanese yen and the Swiss franc, which are considered asafe bet during times of economic and political stress, alsogained as investors' appetite for risk assets waned. USD/

Also supporting the bullion was speculation that the U.S.Federal Reserve could adopt a less aggressive monetary policygoing forward, said Shah.

Fed Chairman Jerome Powell had said last week thatpolicymakers would be "patient" in determining future rate hikesamid expectations the U.S. economy will slow next year and inflation likely to stay below the Fed's 2 percent target nextyear.

Fresh economic forecasts showed officials at the median nowsee only two more rate hikes next year compared to the threeprojected in September.

"We are seeing small physical demand and short-covering ingold," said Peter Fung, head of dealing at Wing Fung PreciousMetals in Hong Kong, adding activity was thin before Christmas.

"We can see support around $1,250. Prices are likely to stayaround the current levels until the end of this year."

Hedge funds and money managers raised their net longpositions in Comex gold to a six-month high in the week to Dec.18, indicating improved interest in the metal.

Also, holdings of the SPDR Gold TrustGLD , the world'slargest gold-backed exchange-traded fund, rose 0.5 percent to772.67 tonnes on Friday. GOL/ETF

Among other metals, palladium XPD= rose 0.7 percent to$1,240.00 per ounce.

Silver XAG= climbed 0.8 percent to $14.72, while platinum XPT= gained 0.6 percent to $791.72 per ounce. (Reporting by Karthika Suresh Namboothiri in Bengaluru; Editingby Subhranshu Sahu and Sunil Nair) ((karthikasuresh.namboothiri@thomsonreuters.com; +91 80 67490997 (If within U.S. call 651-848-5832); Reuters Messaging:karthikasuresh.namboothiri.thomsonreuters.com@reuters.net))


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