May 21, 2015 / 3:25 AM / 5 years ago

PRECIOUS-Gold steady above $1,200 as June rate hike prospects dim

* Fed meet minutes show June rate hike unlikely
    * Minutes support market view of delayed rate hike
    * Dollar near two-week high, SPDR fund outflows continue

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, May 21 (Reuters) - Gold held above $1,200 an
ounce on Thursday as minutes from the Federal Reserve's policy
meet showed the U.S. central bank was unlikely to hike interest
rates in June, in line with market expectations.    
    Spot gold was steady at $1,209.60 an ounce by 0658
GMT, after gaining 0.2 percent in the previous session.
    Minutes of the Fed's April meeting, released on Wednesday,
showed policymakers believed it would be premature to hike
interest rates in June, a view that is already widely held in
the market following disappointing U.S. economic data. 
    The minutes showed Fed officials pushing the prospect of a
rate hike later into the year. 
    "Gold will benefit from the Fed's decision to postpone their
rate hike and the bar for gold's support level look to be raised
from here," said Howie Lee, an analyst at Phillip Futures.
    Rising rates tend to weigh on gold because they increase the
opportunity cost of holding non-yielding bullion while boosting
the dollar, in which it is priced.
    Gold prices have struggled to break out of a $1,170-$1,230
an ounce range since mid-March, hamstrung by uncertainty over
the timing of an expected rise in U.S. interest rates.
    "If gold manages to break above $1,220 decisively, we think
a sustained rally in prices would probably materialize," said
Lee.
    However, investor sentiment has turned bearish in recent
days, as the metal prices have fallen off from three-month highs
reached earlier this week.
    Outflows in SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, continue to undermine investor sentiment.
Holdings of the fund fell 0.41 percent to 715.26 tonnes on
Wednesday - the lowest in four months.
    Recent gains in the dollar have also limited gold's upward
move.
    The dollar traded near a two-week peak against a basket of
major currencies early on Thursday, having held on to most of
its gains after closely watched minutes from the Fed's April
meeting contained no major surprises. 
    A stronger greenback makes gold more expensive for holders
of other currencies, while also reducing the metal's appeal as a
hedge.
    
    PRICES AT 0658 GMT
 Metal            Last     Change  Pct chg
                                          
 Spot gold         1209.6    0.43     0.04
 Spot silver        17.15    0.07     0.41
 Spot platinum       1154    -0.5    -0.04
 Spot palladium     775.6    3.25     0.42
 Comex gold        1209.1     0.4     0.03
 Comex silver       17.17   0.057     0.33
 Euro              1.1096                 
 DXY               95.553                 
                                          
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Michael Perry and
Prateek Chatterjee)
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