PRECIOUS-Gold pares losses on weak U.S. data, despite rate hike expectations

    * Gold prices pare losses after lower PMI data
    * Global stock prices reach record highs
    * Coming up: Fed minutes from last meeting on Wednesday

 (Recasts, updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, Feb 21 (Reuters) - Gold prices pared losses
on weaker-than-expected U.S. economic data on Tuesday, after
falling 1 percent on renewed expectations of an increase in U.S.
interest rates next month that pushed the dollar higher.
    Spot gold        was down 0.2 percent at $1,235.85 an ounce
by 3:23 p.m. EST (2023 GMT), but has gained more than 7 percent
since the start of the year. U.S. gold futures         settled
down 0.02 percent at $1,238.90.
    The dollar strengthened after Federal Reserve members
pointed to the potential for higher U.S. rates next month,
making commodities priced in the currency more expensive for
non-U.S. buyers.       
    Bullion rebounded above its lows after data showed the U.S.
Purchasing Managers Index (PMI) was at 53.9 in February, down
from 55.6 in January and expectations for 55.8.            
    "The Fed was pretty hawkish on the weekend but the PMI was
lower than expected," said Bob Haberkorn, senior market
strategist for RJO Futures in Chicago.
    "It's kind of known the Fed's going to do something in March
but it's like gold is second guessing that a bit."
   Traders are focused on speeches by a number of Federal
Reserve presidents, looking for clues on the timing of U.S. rate
rises, and were awaiting the release of minutes from the Federal
Reserve's Jan. 30-Feb. 1 meeting, on Wednesday at 2 p.m. EST
(1900 GMT).             
    "Gold is capped by the likelihood that U.S. monetary policy
will be tighter at some stage, potentially in March," Societe
Generale analyst Robin Bhar said.
    "There is a lot of political uncertainty, there are
safe-haven flows going into gold."
    Bhar added that gold is also an investment hedge against 
corrections in what look to be over-valued equities.
    Stock prices around the world climbed to record highs on
news euro zone business activity accelerated to its swiftest
pace in six years.            
    "Gold's resilience is all the more impressive considering
U.S. equities are setting record after record, while the dollar
is also fairly strong," INTL FCStone analyst Edward Meir said.
    Support is down to a "myriad political and economic
uncertainties" that lie ahead in 2017, Meir added.
    Also on the radar is President Donald Trump's address to
Congress on Feb. 28, which analysts and traders hope will offer
details on infrastructure spending and tax cuts.
    Elsewhere, silver        fell 0.4 percent to $17.94 an
ounce, platinum        lost 0.3 percent to $997.95 and palladium
       gained 0.6 percent to $776.75.

 (Additional reporting by Arpan Varghese in Bengaluru; Editing
by Phil Berlowitz)