* Investors fear higher U.S. rates will dent demand for gold
* Bullion already down 9 percent this year
* Chorus of brokerages say gold to drop to/below $1,000 (Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 14 (Reuters) - Gold was little changed on Monday, ahead of a Federal Reserve policy meeting this week when the U.S. central bank is expected to raise interest rates for the first time in nearly a decade.
In its last policy meeting of the year on Dec. 15-16, the Fed is seen raising rates by a quarter of a percentage point. urn:newsml:reuters.com:*:nL8N13Z20I
Investors fear higher rates could dent demand for non-interest-paying bullion, while boosting the dollar. Gold has already slid 9 percent for the year, its third straight annual decline, in anticipation of a rate hike.
Spot gold XAU= eased 0.1 percent to $1,073 an ounce by 0651 GMT, after gaining 0.3 percent on Friday.
"With the Fed decision only two days away, price fluctuations will be limited as a rate hike is already priced in," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
Gold prices could go up immediately following the rate hike announcement due to the recent sharp declines, but they will eventually drift lower to $1,000, he said.
"For speculators, the best course of action now is to liquidate part of their gold holdings, whether in exchange traded funds (ETFs) or futures," To said.
Assets in the top gold ETF, SPDR Gold Trust GLD , are already at their lowest since September 2008 on investor outflows. GOL/ETF
Speculators' short positions in gold are near record highs. Hedge funds and money managers reduced their bearish stance in COMEX gold in the week to Dec. 8 as prices rallied modestly, U.S. Commodity Futures Trading Commission data showed on Friday, but were still not too far from the prior week's record high. urn:newsml:reuters.com:*:nL1N14022B
BofA Merrill Lynch said on Friday it expected the gold price to slide to $950 early in 2016 due to the upcoming U.S. rate hike, joining a chorus of other brokerages including Goldman Sachs (N:GS) that have predicted a drop to or below $1,000.
Options traders are also boosting their bets that gold will soon hit $1,000 an ounce, data last week showed. urn:newsml:reuters.com:*:nL3N13X2BO
In the wider markets, the dollar edged higher against a basket of major currencies, limiting gold. A drop in oil prices to seven-year lows also hurt bullion. USD/ O/R
PRICES AT 0651 GMT Metal
Last
Change Pct chg
Spot gold
1073
-1.06
-0.1 Spot silver
13.85
-0.05
-0.36 Spot platinum
842.35
2.17
0.26 Spot palladium
543.9
1.67
0.31 Comex gold
1073.1
-2.6
-0.24 Comex silver
13.875 -0.009
-0.06
COMEX gold and silver contracts show the most active months