* U.S. Federal Reserve raises interest rates
* Dollar strengthens slightly
* Palladium hits fresh high (Updates throughout, adds comments after Fed rate decision)
By Renita D. Young and Peter Hobson
NEW YORK/LONDON, Sept 26 (Reuters) - Gold prices held onto earlier losses on Wednesday as the U.S. dollar trimmed gains after the Federal Reserve raised U.S. interest rates as expected and forecast three more years of economic growth.
In a statement that marked the end of the era of “accommodative” monetary policy, the Fed raised interest rates and left its monetary policy outlook for the coming years largely unchanged.
Gold is sensitive to higher interest rates because they tend to boost the dollar, making gold more expensive for buyers with other currencies.
They also push up U.S. bond yields, reducing the attraction of non-yielding bullion.
Spot gold lost 0.3 percent at $1,197.21 per ounce by 2:16 p.m. EDT (1816 GMT), while the greenback gave up earlier gains, though remained positive against a basket of major currencies.
U.S. gold futures for December delivery settled down $6, or 0.5 percent, at $1,199.10 per ounce.
“The ‘accommodative’ part signals a hawkish policy,” said Bob Haberkorn, senior market strategist at RJO Futures. “Gold is trying to make a move with the dollar making it lower, but it’s hard for it to rally when there’s risk-on in the equity markets.”
Global equities remained strong and U.S. stocks extended gains after the rate hike.
Gold has fallen more than 12 percent from an April high as a vibrant U.S. economy, expectations of higher U.S. interest rates and fears of a global trade war have caused the dollar to rally.
Investors looking for a safe place to park assets have preferred the U.S. currency to bullion, undermining gold’s traditional role as a safe haven, while speculators have ramped up bets that gold prices will fall.
Commerzbank analysts said gold was stuck beneath technical resistance at its 55-day moving average around $1,208 and its 4-month downtrend at $1,220.
Meanwhile, silver dropped 0.1 percent at $14.41 an ounce after touching a three-week high on Tuesday.
Platinum gained 0.7 percent at $828.60 an ounce and palladium increased 0.7 percent at $1,068.70 an ounce, earlier hitting a new 8-month high of $1,070.00.
“On top of a supply squeeze, it’s mostly bargain hunting now in some of these industrial metals,” Haberkorn added. (Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by Chizu Nomiyama and Alistair Bell)