PRECIOUS-Gold hits three-week high on fading U.S. rate hike prospects

* Dollar index trades near five-week low
    * Silver marks three week high after jumping nearly 4
percent on Wednesday

 (Adds comments, updates prices)
    By Vijaykumar Vedala
    BENGALURU, June 9 (Reuters) - Gold hit a fresh three-week
high on Thursday, after jumping 1.5 percent overnight, helped by
a weaker dollar and diminishing expectations of an early
interest rate hike by the U.S. Federal Reserve.
    The safe haven asset has risen by about 1.5 percent this
week so far, boosted by disappointing U.S. non-farm payroll data
and Fed chair Janet Yellen's cautious comments on Monday.
    Spot gold was nearly flat at $1,262 an ounce by 0651
GMT, having hit a high of $1,266.01 earlier in the session, its
best since May 18. U.S. gold rose 0.2 percent to
    "While there is likely further room to the upside for gold,
there may be some road blocks to the rally near term. We expect
that as the FOMC (Federal Open Market Committee) approaches
trading volume may quieten down and some near term traders will
book square and take profits," HSBC analyst James Steel said in
a note. 
    "We suspect net long positions have increased significantly
and this should be partly reflected in the next set of
Commitments of Traders data. This may restrain further purchases
and may even trigger profit taking."
    The yellow metal has risen 19 percent so far this year and
the rally has allowed bullion miners like Barrick Gold 
among others to eye expansion and study new ways to increase
production for the first time in five years.     
    Russia produced 67.75 tonnes of gold in January-April 2016,
up from 63.27 tonnes in the same period last year, the finance
ministry said in a statement on Wednesday. 
    "I think gold is going to stay range bound until we see more
confirmation. We need more confirmation from labour market data
in the U.S. that we get in a month from now. The market wants to
see at least two data points," said Dominic Schnider of UBS
Wealth Management in Hong Kong.
    "There's lot of uncertainty. That uncertainty needs to be
priced out. Do we see that happen in the second half? Yes. But
for the time being it's a wait and see game," he added.
    The dollar index inched 0.1 percent lower to 93.531,
after plumbing to a five-week low of 93.425 on Wednesday. 
    Among other precious metals, spot silver hit a fresh
three-week high on Thursday after climbing nearly 4 percent in
the prior session, its biggest one-day gain since April 19.
Silver rose 1 percent to $17.20 per ounce.
    Spot platinum and spot palladium were flat at
$1,005.50 and $559.98 an ounce respectively.        

 (Reporting by Vijaykumar Vedala in Bengaluru; Editing by
Richard Pullin and Michael Perry)