Gold holds near seven-mth high ahead of key events

By Vijaykumar Vedala

BENGALURU (Reuters) - Gold held near its highest in seven months on Wednesday ahead of key political and economic events that are expected to stoke bullion's safe-haven appeal.

A national election in the UK, a policy meeting of the European Central Bank and a Senate testimony by former FBI director James Comey, due on Thursday, have the potential to boost the appeal of bullion.

Gold is often used as an investment option during times of political and financial uncertainty.

"With the degree of uncertainty around as we head into the latter half of the week, there would appear to be no reason for gold's march higher to peter out," said Jeffrey Halley, a senior market analyst at OANDA.

Spot gold fell 0.1 percent to $1,292.61 per ounce at 0757 GMT. On Tuesday, it rose 1.1 percent to hit its highest level since November last year at $1,295.97 an ounce.

U.S. gold futures for August delivery dipped 0.2 percent to $1,294.9 an ounce.

Some very modest profit-taking from fast money-type traders suppressed gold prices by a dollar or so in early trade, said Alex Thorndike, a trader at MKS PAMP Group.

A U.S. interest rate hike in mid-June should yield a more expensive greenback and pull gold prices lower, OCBC analyst Barnabas Gan said.

"At $1,290, gold prices look too rich for our comfort. It has been rallying simply because of safe-haven demand," Gan said.

"Once this driver that underpins the strong gold price disappears, beyond Thursday and till the end of June, expect gold to lose its lustre."

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, on Tuesday rose 0.49 percent to 855.16 tonnes.

The dollar index held steady against a basket of major currencies but stayed close to a near-seven month low hit on Tuesday.

Among other precious metals, spot silver slipped 0.2 percent to $17.64, platinum was flat at $955.74, while palladium rose 0.3 percent at $855.70.

On Tuesday, palladium hit its highest since September 2014 at $858.70.

(Reporting by Vijaykumar Vedala; Additional reporting by Koustav Samanta; Editing by Tom Hogue and Biju Dwarakanath)