PRECIOUS-Gold little changed; firm dollar, U.S. rate outlook weighs

    * Strong U.S. bond yields underpin dollar
    * Spot gold may retest support at $1,302/oz- technicals
    * SPDR Gold holdings down 0.17 pct on Monday
    * Palladium hits over 1-week low

 (Updates prices)
    By Apeksha Nair
    BENGALURU, May 15 (Reuters) - Gold traded sideways in Asian
hours on Tuesday, buoyed by safe-haven demand with upside
potential restricted by a firm dollar and outlook for higher
interest rates in the United States.
    Spot gold        was nearly unchanged at $1,311.51 per ounce
at 0619 GMT.
    U.S. gold futures         for June delivery were, however,
down 0.5 percent at $1,311.30 per ounce.
    The rising tensions in Gaza had induced some safe-haven
buying for gold earlier in the session, ANZ analysts said in a
    Israeli troops shot dead dozens of Palestinian protesters on
the Gaza border on Monday when the high-profile opening of the
U.S. embassy to Israel in Jerusalem by the Trump administration
raised tension to boiling point after weeks of demonstrations.
    "We're seeing little sparks of interests on the back of
these issues but at the moment it doesn't look significant
enough to raise concerns over the medium-term which support a
more sustained level of safe-haven buying," ANZ analyst Daniel
Hynes said.
    Meanwhile, a firmer dollar and stronger U.S. bond yields on
Tuesday, after a Federal Reserve official backed the case for
further interest rate hikes in United States, were limiting
upside for gold.                    
    "The market's been waiting for the next rate hike by the
Fed... and I think gold prices are going to remain under
pressure till we get through that hike," Hynes said.
    The U.S. central bank is widely expected to raise benchmark
interest rates at its next policy meeting in June.
    Higher interest rates tend to boost the dollar and push bond
yields up, making greenback-denominated gold more expensive for
other holders and denting its non-yielding appeal.
    The U.S. yield curve could invert later this year or early
2019, St. Louis Federal Reserve James Bullard said on Monday, a
scenario which has preceded recent U.S. recessions.             
    Elsewhere, three European Central Bank policymakers stuck
with an upbeat assessment of the euro zone economy on Monday,
shrugging off signs of a slowdown in inflation and activity.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.17 percent to 856.17
tonnes on Monday.             
    Spot gold may retest a support at $1,302 per ounce, Reuters
technical analyst Wang Tao said.              
    In other precious metals, silver        was down 0.2 percent
at $16.47 per ounce. 
    Platinum        was unchanged at $905.24 per ounce, while
palladium        fell nearly 2 percent to $976.97 an ounce,
after earlier dropping to an over one-week low at $964. 

 (Reporting by Apeksha Nair in Bengaluru; Editing by Sunil Nair)