* U.S. Senate vote clears hurdle for Trump tax cuts
* Dollar, U.S. bond yields rise
* Gold down 1.9 pct this week (Updates prices; adds comment, byline, NEW YORK dateline)
By Renita D. Young and Peter Hobson
NEW YORK/LONDON, Oct 20 (Reuters) - Gold prices fell on Friday after the U.S. Senate approved a budget blueprint that paves the way for tax cuts, causing stocks, the dollar and bond yields to rise.
The Republican-controlled Senate voted by 51-to-49 late on Thursday for the measure, clearing a hurdle for tax cuts that would add up to $1.5 trillion to the federal deficit over the next decade. betting on faster economic growth as a result bought riskier assets while bond holders reduced their positions on worries that inflation and federal borrowing could rise. MKTS/GLOB FRX/ US/
U.S. Treasury yields rose further Friday afternoon, reversing a modest pullback after a White House official said Federal Reserve Chair Janet Yellen was in the White House for lunch with U.S. President Donald Trump's economic adviser Gary Cohn. could announce his choice for the next chair of the U.S. central bank as early as next week after he interviewed five candidates including Yellen. report on Thursday suggested Trump was leaning towards Fed Governor Jerome Powell, perceived as a less hawkish candidate. bond yields increase pressure on bullion because gold does not offer a yield, while a stronger dollar makes it more expensive for holders of other currencies.
Investors may also see tax cuts as a cause for higher U.S. interest rates, said INTL FCStone analyst Edward Meir. Higher rates would push up bond yields and the dollar.
Spot gold XAU= was down 0.77 percent at $1,279.44 an ounce by 2:41 p.m. EDT (1841 GMT), down about 1.9 percent on the week.
U.S. gold futures GCcv1 for December delivery settled down $9.50, or 0.7 percent, at $1,280.50 per ounce, 1.8 percent lower on the week.
The net long position of money managers in Comex gold has fallen from a peak in early September but is still elevated. 1088691MNET
"Right now, you could see a lot of open interest being abandoned if we don't have another big move (in gold) next week," said George Gero, managing director of RBC Wealth Management in New York.
The European Central Bank is expected to say on Oct. 26 it will start trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January, a Reuters poll showed. other precious metals, silver XAG= was down 1 percent at $17.02 an ounce, taking its fall this week to around 2 percent.
Platinum XPT= was down 0.3 percent at $918.50 an ounce and palladium XPD= was up 1.5 percent at $972.80 per ounce. Both metals were down on the week.