* Fed expected to keep benchmark rate unchanged this week
* Dollar weaker but off recent lows
* Coming up: German Ifo business climate at 0900 GMT
(Adds Mizuho comment, updates prices)
By Manolo Serapio Jr
MANILA, Jan 25 (Reuters) - Gold edged higher on Monday,
buoyed by expectations that the U.S. Federal Reserve may have
fewer chances to raise interest rates this year in the face of a
wobbly global economy.
That bodes well for non-interest bearing gold, which fell
more than 10 percent last year, after the Fed lifted rates for
the first time in nearly a decade in December.
The Federal Open Market Committee meets this week and is
widely expected to leave its federal funds rate unchanged at
0.25-0.50 percent when policymakers conclude their meeting on
Wednesday.
Falling inflation assumptions, coupled with turbulence in
global markets could lead them to signal deepening concern over
the outlook for the U.S. and world economy.
Spot gold XAU= was up 0.2 percent at $1,100.56 an ounce by
0638 GMT, after gaining nearly 1 percent last week.
"Given the turbulence in financial markets, the Fed might
not be able to hike interest rates too many times in 2016," said
Mark To, head of research at Hong Kong's Wing Fung Financial
Group.
"If gold can stay above $1,100 in the coming days, it may
signal a further rebound, maybe even to $1,200 in the coming
months."
Expectations for a March rate increase are already starting
to fade, and economists polled by Reuters now forecast three
hikes in 2016 rather than the four initially floated by the Fed.
Mizuho Bank expects U.S. fourth-quarter gross domestic
product to be revised lower which it said "can be a soothing
balm if accompanied by renewed Fed dovishness."
The U.S. government will release its first reading on
fourth-quarter economic growth on Friday. Economists polled by
Reuters suggest U.S. GDP growth of 0.80 percent in
October-December and annual expansion of 2.5 percent in 2016.
ECON
Gold's gains, also spurred by a softer dollar, came despite
higher equities as Asian stocks tracked Wall Street's rally on
Friday. NKTS/GLOB
The precious metal had benefited from investor aversion
towards risky assets that has hit global stocks and crude oil.
It peaked at $1,109.20 last week, its loftiest since Jan. 8.
U.S. gold for February delivery GCcv1 gained 0.5 percent
to $1,101.30 an ounce.
Hedge funds and money managers increased their bullish bets
in COMEX gold in the week to Jan. 19, and also boosted their
bullish bets in silver to the highest in more than two months,
U.S. Commodity Futures Trading Commission data showed on Friday.
Spot silver XAG= rose 0.6 percent to $14.09 an ounce and
palladium XPD= jumped 1.2 percent to $500. Platinum XPT=
climbed 0.6 percent to $834.39 per ounce, regaining some lost
ground after skidding to a seven-year low of $806.31 last week.