* Gold up 0.4 percent for the week
* Dollar steadies above 5-month low
* Silver hits highest in almost five months
(Updates throughout, changes dateline from SINGAPORE)
By Clara Denina
LONDON, March 18 (Reuters) - Gold edged down on Friday, as
the dollar steadied from a five-month low, but it remained on
track to end the week on a firmer note after the Federal Reserve
scaled down rate hike expectations.
Spot gold XAU= was down 0.3 percent at $1,254.53 an ounce
by 1130 GMT, while U.S. gold GCcv1 fell 0.8 percent to
$1,255.30 an ounce. Spot gold was up around 0.4 percent on the
week.
"There has been a bit of selling into the rally in the past
couple of days but on whole gold has managed to hang on to its
gains," Mitsubishi Corp analyst Jonathan Butler said.
"With the dovish overall macro outlook - the Fed's more
dovish stance and ECB and Bank of Japan also pursuing very
aggressive stimulus policies - affecting the strength of the
dollar and U.S. Treasury yields, gold should benefit."
The dollar rose 0.3 percent against a basket of main
currencies, but was still near a 17-month low against the yen
and set to end the week 1.5 percent lower.
The U.S. central bank held interest rates steady on
Wednesday and indicated it would tighten policy this year, but
fresh projections showed policymakers expect two quarter-point
increases by year-end, half the number forecast in December.
Expectations the Fed would raise rates steadily this year
had faded since the bank's initial hike in December, as concerns
over global growth roiled financial markets.
A low interest rate environment tends to decrease the
opportunity cost of holding non-yielding bullion.
SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings rose 1.50 percent to
807.09 tonnes on Thursday from 795.20 tonnes on Wednesday.
Silver XAG= rose more than 1 percent to its highest since
late October at $16.13. It is up 4 percent this week.
Platinum XPT= fell 0.3 percent to $980 and palladium
XPD= gained 0.5 percent to $592.70.