PRECIOUS-Gold dips, but holds above $1,200 on softer equities

* Gold eases after 2 percent gain overnight
    * Asian shares follow Wall Street lower
    * OCBC, Nomura say gold prices could pull back more

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Feb 19 (Reuters) - Gold gave up some of its sharp
overnight gains on Friday, but held above $1,200 an ounce as a
drop in equities stoked fresh safe-haven demand for the metal. 
    Asian shares slipped from near three-week highs on Friday,
following a drop in U.S. equities overnight that snapped a
three-day rally. 
    Bullion's 16 percent rally so far this year has made it the
best performing asset amidst turmoil in stock markets and
concerns over the global economy. But some analysts say markets
have over-reacted and that the price for gold will fall further.
    Spot gold eased 0.5 percent to $1,225.43 an ounce by
0704 GMT, after gaining 2 percent on Thursday. For the week, it
has lost 1 percent, as traders took profits after the metal
climbed to a one-year top last week.
    "We think the current gold price rally will reverse, once
risk-sentiment buying fades, similar to the trend seen in early
2014 and 2015," Nomura said in a note, adding that they expect
prices to average $1,055 in the first half.
    "Despite current financial market volatility, we do not
think there has been a major change in the fundamentals of the
global economy." 
    For now, the metal was supported by inflows into gold-backed
exchange-traded funds (ETFs), holdings of which have already
risen this year by more than they fell in the whole of 2015.
    Assets in SPDR Gold Trust, the world's top gold ETF,
rose 0.38 percent to 713.63 tonnes on Thursday.
    Gold is also being bolstered by rising speculation that the
Federal Reserve would not be able to hike U.S. interest rates
due to concerns about the economy, though economists polled by
Reuters see two rate hikes this year. 
    "The key factor underpinning our bearish view for gold
prices will still be the FOMC rate outlook for the year," said
OCBC Bank analyst Barnabas Gan, referring to the Federal Open
Market Committee. 
    Gan raised his year-end gold forecast from $950 an ounce,
but still kept the estimates below bullion's current levels.
    He expects gold to reach $1,000 if the Fed introduces three
rate hikes, and $1,150 if the central bank hikes rates just once
this year. 
    In the physical markets, Asian gold demand slowed this week
as consumers opted to wait out the metal's biggest rally in
years, with discounts in key consumer India hitting a record
high as some investors cashed-out holdings. 
    PRICES AT 0704 GMT
 Metal            Last      Change   Pct chg
 Spot gold         1225.43    -6.52    -0.53
 Spot silver        15.391   -0.018    -0.12
 Spot platinum      941.85    -1.55    -0.16
 Spot palladium     501.85     1.42     0.28
 Comex gold         1226.5      0.2     0.02
 Comex silver       15.415   -0.017    -0.11
 COMEX gold and silver contracts show the
 most active months
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin)