Gold holds tight range as uncertain U.S. rate view saps dollar

By Sumita Layek

BENGALURU (Reuters) - Gold consolidated in a tight $6 range on Monday while investors watched for catalysts in a holiday week, holding above $1,220 as the dollar softened on uncertainty about U.S. interest rates.

Spot gold inched 0.1 percent lower to $1,220.63 per ounce by 1339 GMT, having hit a one-week high of $1,225.29 in the previous session.

U.S. gold futures were down 0.2 percent at $1,221.10.

"We will continue to see some consolidation between $1,200 and $1,250 for a couple of weeks until we see a kind of catalyst ... this could be Brexit negotiations, the G20 meeting between the U.S. and China," said Hussein Sayed, chief market strategist at FXTM.

"If we hear more dovish comments on the tightening cycle, this will drag the dollar lower and give another push to gold prices."

The dollar drifted lower, having posted its biggest weekly drop in two months, after U.S. Federal Reserve policymakers raised concerns about a potential global slowdown, triggering doubts over how far the rate-tightening cycle has left to run.

The Fed has raised rates three times so far this year, making it more expensive to hold non-interest-bearing gold, and a fourth rate increase is expected next month.

"With America on holiday on Thursday on account of Thanksgiving Day, it's going to be a very quiet week," said Alasdair Macleod, head of research at GoldMoney.com.

World shares crept higher, amid conflicting signals about a potential truce in the China-U.S. trade dispute.

"Unless we see more turbulence in emerging markets and industrialised country stock markets, then the outlook for gold is not positive," a Germany-based analyst said.

Indicative of investor sentiment toward bullion, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2 percent to their lowest in a week on Friday.

Also, hedge funds and money managers boosted their net short position in gold to the highest in five weeks.

Palladium dipped 0.8 percent to $1,167.80 per ounce, having climbed to an all-time high of $1,185.40 in the previous session.

The autocatalyst metal is outrunning other precious metals, with a surge to record highs putting it within a whisker of parity with gold for the first time in 16 years.

Silver slipped 0.4 percent to $14.36 an ounce, while platinum was down 0.1 percent at $845.30 per ounce.

(Reporting by Sumita Layek and Swati Verma in Bengaluru; Editing by Edmund Blair and Dale Hudson)