By Marcy Nicholson and Maytaal Angel

NEW YORK/LONDON, Feb 24 (Reuters) - Gold reached its highest in 3-1/2 months on Friday as the dollar fell to a one-week low after the new U.S. Treasury chief poured cold water on the "Trumpflation trade" that had boosted the greenback this year.

Treasury Secretary Steven Mnuchin said on Thursday that any steps U.S. President Donald Trump's administration takes on policy would probably have only limited impact this year, though he wants to see tax reform passed by August.

The comments suggested much work was still needed on the sweeping tax plan that Mnuchin called his main priority, and which investors had bet would stoke growth and inflation this year.

"We've got a vacuum of (U.S. domestic) policy, real (interest) rates going down, the dollar going sideways and geopolitical (jitters) around the world ... all helping gold," ICBC Standard Bank analyst Tom Kendall said.

"There is apparently a move of institutional investor money into gold and there are usually very good reasons for that."

Spot gold was up 0.6 percent at $1,256.75 an ounce by 2:26 p.m. EST (1926 GMT), having touched its highest since Nov. 11 at $1,260.10 earlier, zeroing in on the 200-day moving average. It was on track to finish the week higher for the fourth straight week.

U.S. gold futures settled up 0.55 percent at $1,258.30.

Tempering gains in bullion, a poll on Friday suggested French presidential candidate Emmanuel Macron would beat far-right leader Marine Le Pen, who has promised a referendum on European Union membership.

Key global stock markets fell as investors scaled back bets that Trump's policies would benefit economic growth. The dollar later pared losses.

Holdings of the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, have risen more than 5 percent this month on geopolitical risk.

"These dollar-denominated and perceived safe-haven precious metals have risen during a time when Wall Street has repeatedly hit new all-time highs and despite the dollar holding near its multi-year highs," said Fawad Razaqzada, technical analyst for Forex.com, adding that precious metals appeared poised to rise further in the coming weeks.

"The metals' remarkable performance may suggest that investors are positioning themselves up for a major risk-off event - such as a collapse in the US stock markets."

Silver rose 0.8 percent to $18.30 per ounce, having touched its highest in 3-1/2-months at $18.40. Silver has gained about 1.8 percent this week in what could be its ninth straight weekly gain.

Platinum rose 1.8 percent to $1,023.75 per ounce, after hitting its highest since early October at $1,028.60. Palladium (Additional reporting by Arpan Varghese and N R Sethuraman in Bengaluru; Editing by Susan Fenton and Chizu Nomiyama) ((Marcy.Nicholson@thomsonreuters.com, +1 646 223 6043; Reuters Messaging Marcy.Nicholson.ThomsonReuters.com@reuters.net))