PRECIOUS-Gold pares gains as equity rebound buoys risk sentiment

(New throughout, updates prices, market activity and comments)

* Spot gold heads for biggest December gain in 10 years

* Silver hits over 4-month highs

* U.S. government shutdown may stretch until Jan. 3 -official

* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl

By Sethuraman N R and Arijit Bose

Dec 26 (Reuters) - Gold pared all its earlier intraday gains on Wednesday, as rejuvenating U.S. equities made safety assets less lucrative to investors, while a stronger dollar further dented appeal for the metal.

Spot gold XAU= fell 0.2 percent to $1,266.32 per ounce at 2:59 p.m. (1959 GMT). It had earlier touched its highest since June 19 at $1,279.06.

U.S. gold futures GCv1 settled up 0.1 percent at $1,273 an ounce.

"With the U.S. equity markets rebounding from a Christmas Eve sell-off, investors are looking to take more of a wait and see approach, and starting to pull a little bit out of safe-haven assets and potentially ship more into the equity markets," said Josh Graves, senior commodities strategist at RJO Futures in Chicago.

A strong showing by retailers and technology companies in the United States saw the country's equities bounce back from 20-month lows, boosting the dollar. USD/

However, political quandary following a partial government shutdown and President Donald Trump's discontentment with the Federal Reserve continued to pressure the greenback. are near-term constructive on gold," said David Song, an analyst at DailyFX. "There are concerns about global growth in 2019, global geopolitical uncertainties and Trump's continued attack on the Federal Reserve and how long the government shutdown will continue in the U.S."

Other concerns included the departure of U.S. Defense Secretary James Mattis and U.S.-China trade tensions.

Spot gold is up 3.6 percent for the month thus far, on track for its biggest December gain in about 10 years.

Gold is seen as a hedge against political and economic worries. Holdings of SPDR Gold, the largest gold exchange-traded fund, are at their highest point since August and have risen about 6 percent since touching more than 2-1/2-year lows in October. GOL/ETF

"Gold looks like it's breaking out higher with a short-term target of $1,300 and medium-term target of $1,360-$1,370," said Tai Wong, head of base and precious metals derivatives trading at BMO.

"More importantly the algorithmic trading programs which are practically all momentum followers will continue to push gold higher as the trend remains clearly up."

Among other metals, silver XAG= gained 1.8 percent to $15 per ounce having touched $15.17, its highest since Aug. 13, earlier in the day.

Platinum XPT= was up nearly 2 percent to $797.70 per ounce, while palladium XPD= was up 0.6 percent to $1,253.50 per ounce.

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