* Shares up, dollar down as Fed sounds cautious note
* Silver rises above $16/oz, first time since October
* GRAPHIC-2016 asset returns: reut.rs/1WAiOSC
* GRAPHIC-FOMC rate predictions: tmsnrt.rs/1RzUE7v
(Updates prices; adds comment, second byline, NEW YORK
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, March 17 Gold turned lower on
Thursday, consolidating from a 2.5 percent surge in the previous
session when the Federal Reserve cut the number of interest rate
rises it forecasts for this year, sending the dollar sharply
The U.S. central bank held interest rates steady and
indicated it would tighten policy this year, but fresh
projections showed policymakers expect two quarter-point
increases by year-end, half the number forecast in December.
Spot gold was down 0.4 percent at $1,257.11 an ounce
at 3:02 p.m. EDT (1902 GMT), after climbing 0.7 percent to
"Yesterday was the excitement. Today is more the
consolidation phase," said James Steel, chief metals analyst for
HSBC Securities in New York, referring to the prior session's
rally in response to the Fed's dovish statement.
U.S. gold futures for April delivery settled up 2.9
percent at $1,265 an ounce. The futures market's move higher was
due to its lower close prior to the Fed statement on Wednesday.
Expectations the Fed would raise rates steadily this year
had faded since the bank's initial hike in December, as concerns
over global growth roiled financial markets.
Wednesday's statement suggested the Fed remained cautious on
the potential risks posed by an uncertain global economy.
"It was expected that the Fed wouldn't raise rates, (but)
the tone sounded less optimistic than the market had thought,"
Natixis analyst Bernard Dahdah said.
Rising rates tend to pressure gold by lifting the
opportunity cost of holding non-yielding bullion, while boosting
the dollar, in which it is priced.
The U.S. dollar index dropped to a five-month low
while shares in major markets were on track to close at their
highest level of the year.
Further gains in gold prices could prove elusive without
further stimulus, analysts said.
"I ... think we shouldn't expect too much strength
immediately after this announcement, since not that many people
thought rates would rise again at this point," Glaux Metal
consultant David Jollie told the Reuters Global Gold Forum.
"They key questions are rather what is going to happen to
inflation and when might rates rise later this year."
Among other precious metals, spot silver briefly rose
above $16 an ounce for the first time since October, up 2.8
percent to $16.03.
"Silver has already eroded a couple of bearish trend lines
and has broken above some key resistance levels too," said Fawad
Razaqzada, technical analyst for Forex.com.
Platinum was up 0.7 percent at $983 an ounce and
palladium was up 2.2 percent at $592.40.
(Additional reporting by Naveen Thukral in Singapore; Editing
by David Goodman and Mark Potter)