* Political drama in Washington unsettles investors
* Gold has biggest one-day gain in a month on Thursday
* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl (Updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Zandi Shabalala
NEW YORK/LONDON, May 12 (Reuters) - Gold rose on Friday and was set to end the week little changed as the sudden sacking of the head of the FBI in the United States stoked investor concerns and boosted demand for bullion, and the U.S. dollar and Treasury yields fell.
Spot gold XAU= was up 0.3 percent at $1,228.01 an ounce by 2:52 p.m. EDT (1852 GMT), hovering around the 100-day moving average. Gold rose 0.5 percent in the previous session, its biggest one-day gain in a month.
U.S. gold futures GCcv1 settled up 0.3 percent at $1,227.70.
"You continue to see the political uncertainty continue to support gold," said ETF Securities analyst Martin Arnold, citing the dismissal of the Federal Bureau of Investigation's (FBI) James Comey and the upcoming British election as sources of uncertainty.
U.S President Donald Trump on Thursday ran into resistance for calling ousted Federal Bureau of Investigation chief Comey a "showboat". The attack was swiftly rebuffed by top U.S. senators and acting FBI Director Andrew McCabe, who pledged that an investigation into possible Trump campaign ties to Russia would proceed. capping gains in gold are expectations that the U.S. Federal Reserve will increase interest rates in June.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Traders are expecting a 100 percent probability of an interest rate increase in June, CME Group's (NASDAQ:CME) FedWatch showed.
"After the recent drop, we perceive gold as looking technically stretched, negative momentum indicators are beginning to fade and a June Fed rate hike seems largely expected," said Giovanni Staunovo, analyst for UBS Chief Investment Office.
World stock markets paused near record highs after underwhelming U.S. retail sales data and worries over China's banking system spurred investors to lock in recent profits and pushed U.S. Treasury yields and the dollar lower. MKTS/GLOB USD/ has found technical support from a rising trend line," said Fawad Razaqzada, technical analyst for Forex.com.
"But with the long-term bearish trend line still in place and the metal recently moving back below the technically important 50- and 200-day moving averages, the path of least resistance remains to the downside despite the bounce."
Among other precious metals, silver XAG= rose 0.7 percent to $16.41 while platinum XPT= eased 0.1 percent lower to $913.65, both set for their first weekly rise in four.
Palladium XPD= rose 0.2 percent to $803.
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http://tmsnrt.rs/2lvmIzW GRAPHIC-2017 asset returns:
http://tmsnrt.rs/2jvdmXl
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