Gold poised for best week in five on cautious Fed, softer dollar

SINGAPORE (Reuters) - Gold held near a two-week high on Friday and was set to post its strongest week in five as the Federal Reserve's caution over raising U.S. interest rates and weakness in the dollar burnished the metal's appeal.

FUNDAMENTALS

* Spot gold had eased 0.3 percent to $1,237.10 an ounce by 0048 GMT, but was not too far from a two-week high of $1,243.50 hit in the previous session. For the week, the metal has gained 1.3 percent.

* The dollar slumped to a 17-month low against the yen on Thursday on a cautious Fed, while global growth concerns knocked down equities. [MKTS/GLOB]

* Minutes from the Fed's March policy meeting released on Wednesday showed policymakers debated whether an interest rate hike would be needed in April, although a consensus emerged that risks from a global economic slowdown warranted a cautious approach.

* A slower pace in hiking rates would boost non-interest-paying gold, while hurting the dollar.

* Markets were closely watching comments from Fed officials for clues about the timing of any rate hikes.

* Gold rose 16 percent in the first quarter of the year, its best quarterly performance in nearly 30 years, on speculation the Fed may delay hiking rates.

* The U.S. economy is on a solid course and still on track to warrant further interest rate hikes, Fed Chair Janet Yellen said on Thursday.

* San Francisco Fed President John Williams said Thursday that at least two interest-rate hikes this year is the "right course" so long as the U.S. economy continues to grow, businesses add jobs, and inflation picks up as he expects.

* The Fed could stoke financial instability and set the stage for a recession if it waits too long to raise interest rates further, Kansas City Fed President Esther George said on Thursday.

* A steep rise in gold prices may have given hope to a battered mining industry in 2016, but after four tough years producers in Africa are still too wary to call the bad times over.

(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)