* Stocks slip on risk aversion, dollar edges lower

* Speculators cut long positions in gold for second week

* Coming up: first U.S. presidential debate, 0100 GMT Tues

(Updates prices)

By Jan Harvey

LONDON, Sept 26 (Reuters) - Gold steadied on Monday as last week's rally ran out of steam, with markets awaiting a U.S. presidential debate later in the day for pointers on the outcome of November's election.

The metal ended Friday little changed but was up 2 percent week on week, its biggest weekly gain in nearly two months. That was driven chiefly by the U.S. Federal Reserve's cautious tone on interest rates after its policy meeting on Wednesday.

However, uncertainty over the outlook for U.S. monetary policy and sluggish demand for physical metal in Asia kept a lid on gains later in the week.

Spot gold XAU= was at $1,336.95 an ounce at 1130 GMT, little changed from $1,337.21 late on Friday. U.S. gold futures GCv1 for December delivery were down 10 cents at $1,340.70.

"Gold remains stuck in a relatively tight range for a third day," said Saxo Bank's head of commodity research, Ole Hansen.

"Demand from hedge funds and investors ... has been absent in recent weeks. This despite a benign U.S. rate outlook, (Donald) Trump gaining in the polls and a weaker dollar and stock market weakness today, driven by losses in the banking sector."

U.S. Commodity Futures Trading Commission data showed on Friday that hedge funds and money managers cut their net long position in COMEX gold for the second straight week in the seven days to Sept. 20.

"Underlying support remains, but having traded sideways for the past three months, investors have become cautious," Hansen said.

"A technical break above $1,346 would force a response and the strength of that would indicate whether it's onwards and upwards or back down to test support."

Stock markets declined in Europe and Asia, tracking losses on Wall Street, as appetite for assets seen as higher risk was blunted by the looming U.S. presidential debate and uncertainty about oil prices ahead of an informal OPEC meeting. MKTS/GLOB

The first face-off between Republican Trump and Democrat Hillary Clinton will take place at 0100 GMT on Tuesday, with investors looking for clues on who will win the race to lead the world's biggest economy.

"With Trump closing the gap with Clinton, the uncertainty is likely to keep gold underpinned," MKS said in a note.

Weakness in risk appetite weighed on the more industrial precious metals, with platinum XPT= down 1.6 percent at $1,033.50 and palladium XPD= dropping 1.4 percent to $690.50.

Silver XAG= fell 1.4 percent to $19.41.

(Additional reporting by Swati Verma and Nallur Sethuraman in Bengaluru; Editing by Mark Potter and David Goodman) ((jan.harvey@thomsonreuters.com; +44 0 207 542 7744; Reuters Messaging: jan.harvey.thomsonreuters.com@reuters.net))