By Jan Harvey
LONDON (Reuters) - Gold eased on Thursday as a run higher in equities tempered upward momentum in the precious metal, though uncertainty over the direction of U.S. monetary policy helped to keep prices above $1,200 an ounce.
The dollar and gold, which is highly sensitive to rises in U.S. interest rates, were stuck in narrow ranges after minutes of the Federal Reserve's last meeting released on Wednesday provided few fresh clues on the pace of U.S. rate increases this year.
Stock markets also firmed in Europe after a positive session in Asia overnight and as benchmark Brent crude oil prices rose 1 percent. Sharp losses in oil and stocks drove gold to a one-year high at $1,260.60 an ounce last week.
Spot gold was down 0.2 percent at $1,206.56 an ounce at 1231 GMT, while U.S. gold futures for April delivery fell 0.3 percent to $1,207.60.
"Stocks have been rising for three days, so there seems to be a fair degree of calmness now in the markets," Societe Generale analyst Robin Bhar said. "That's reflected in the fact that more risky assets are moving higher and gold is out of the limelight."
Inflows for gold-backed exchange-traded funds (ETFs), the holdings of which have already risen this year by more than they fell in the whole of 2015, showed investor appetite has sharpened.
"At the moment there's enough support in terms of negative interest rates and further flows into ETFs to suggest that for the time being as gold consolidates, prices will be well supported," Bhar said. "There's still huge debate about how the Fed will approach interest rate increases."
Minutes from the Fed's last policy meeting showed that policymakers still expect to raise rates this year. They even discussed a rise at the January 26-27 policy meeting but were divided over how to interpret financial market volatility.
Gold tends to benefit from lower rates, which cut the opportunity cost of holding non-yielding assets.
"The January FOMC minutes show members were concerned about weakening growth in foreign economies and turbulence in global financial markets," HSBC said in a note.
"They were unable to agree on what these developments implied for the domestic U.S. economy, only that uncertainty had increased and that downside risks were on the rise."
Silver was up 0.1 percent at $15.30 an ounce, while platinum dropped 0.2 percent to $940.60 and Palladium gained 0.2 percent to $512.20.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Susanna Twidale and David Goodman)
