* Fed minutes scheduled for release at 1800 GMT
* World stocks under pressure from China downgrade
* GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl
(Updates prices, adds comment)
By Jan Harvey
LONDON, May 24 Gold steadied just above $1,250
an ounce on Wednesday, taking a breather after the previous
day's fall as investors awaited minutes of the Federal Reserve's
latest meeting for clues on the outlook for U.S. interest rates.
The metal is highly sensitive to rising U.S. rates, which
increase the opportunity cost of holding non-yielding bullion,
while boosting the dollar, in which it is priced.
Spot gold XAU= was at $1,251.83 an ounce at 1330 GMT, little
changed from $1,250.76 late on Tuesday, when it slipped 0.7
percent after two days of gains.
The minutes of the Federal Open Market Committee's early May
meeting are due to be released at 1800 GMT. Interest rate
futures on Tuesday implied traders saw about an 83 percent
chance of a rate increase in June, up from 79 percent on Monday.
"(We're in) wait and see mode ahead of the FOMC minutes
later today and the OPEC meeting tomorrow," Commerzbank analyst
Carsten Fritsch said, adding that the Fed is likely to signal
further gradual rate hikes.
Expectations for U.S. interest rates to rise next month and
potentially again later in the year have been a major factor in
keeping gold prices pinned below chart resistance at $1,300 an
ounce this year.
Gold has risen 3 percent since hitting a near-two month low
of $1,213.81 on May 9, driven chiefly by political turmoil in
the United States after President Donald Trump fired FBI
director James Comey, which prompted a drop in stock markets and
put the dollar under pressure.
"While the selling appetite seems to be fading following
four weeks of long liquidation, (gold) still needs a catalyst to
break higher," Saxo Bank's head of commodity research Ole Hansen
"At this stage the risk-reward seems skewed to the upside,
but with the multi-year downtrend lurking just above I see muted
fund interest until a potential break has been realised."
World stock markets eased on Wednesday after China's
sovereign credit rating was downgraded and as investors eyed a
pause in Wall Street's four-day winning streak, the longest in
over three months. The dollar was little changed against a
U.S. gold futures for June delivery were down $3.30
an ounce at $1,252.20.
Among other precious metals, silver was up 0.1
percent at $17.04 an ounce, while platinum was 0.1
percent higher at $940.60 an ounce. Both hit their highest since
late April in the previous session.
Palladium was down 1.4 percent at $760 an ounce.
(Additional reporting by Vijaykumar Vedala in Bengaluru,
editing by David Evans and Ed Osmond)