PRECIOUS-Gold hovers near 2-wk high on weaker dollar after Fed rate view

    * Fed hikes interest rates, sticks to 2 more hikes view
    * Gold up 1.4 percent so far for the week
    * Trade war tensions between U.S. and China seen supporting

 (Adds comment, updates prices)
    By Eileen Soreng
    March 22 (Reuters) - Gold prices held steady on Thursday,
hovering near two-week highs hit in the previous session on a
weaker dollar after the U.S. Federal Reserve disappointed
investors, who were expecting more hawkish comments on interest
rate rises.
    The Fed raised interest rates on Wednesday and forecast at
least two more hikes in 2018, contrary to three more increases
most market watchers expected.             
    In its first policy meeting under new Fed chief Jerome
Powell, the U.S. central bank indicated that inflation should
finally move higher after years below its 2 percent target and
that the economy had recently gained momentum.
    "The FOMC statement was more dovish than we thought
warranted ... At some stage, the Fed will have to grasp the
nettle, but the danger is that in doing so, it will bring
forward a credit crunch," said Alasdair Macleod, head of
research with Toronto-based Goldmoney Inc.
    "These are good conditions for gold, because we can expect
the dollar to weaken."
    Spot gold        rose 0.1 percent to $1,332.77 per ounce at
0739 GMT. Prices rose to a two-week high of $1,336.59 of
Wednesday, and also registered their biggest single-day
percentage gain since May 17, 2017.
    U.S. gold futures         for April delivery rose 0.7
percent to $1,331.10 per ounce.
    "The fact that gold approached its recent 2018 low (of
$1,306.91) on Tuesday, but failed to penetrate it, must also be
construed as a constructive sign for technical traders," INTL
FCStone analyst Edward Meir said in a note.
    Against a basket of currencies, the dollar index        was
down 0.3 percent at 89.509, after touching an over one-month low
of 89.396. The Fed's decision led the U.S. dollar to its largest
fall in two months.       
    Meanwhile, investors see trade tensions between the U.S. and
China lending further support to gold, which is seen as a
safe-heaven asset during times of political and financial
    "If you factor in the significant near-term geopolitical
concerns and the uncertain equity market fallout from an
escalation of a trade war with China, gold has to be a mainstay
component in any investment portfolio," Stephen Innes, APAC
trading head at OANDA, said. 
    In other precious metals, spot silver        was up 0.3
percent to $16.57 per ounce, while platinum        gained 0.6
percent to $959.30 per ounce.
    Palladium        was little changed at $989.72 per ounce.

 (Reporting by Eileen Soreng in Bengaluru; editing by Richard
Pullin and Sunil Nair)