* World Bank cuts 2016 global growth forecast
* Dollar lingers near four-week lows
* Silver, palladium near three-week highs
(Updates prices)
By Koustav Samanta
BENGALURU, June 8(Reuters) - Gold touched a fresh two-week
high on Wednesday as the possibility of an early U.S. interest
rate hike appeared to dim following dovish comments by Federal
Reserve Chair Janet Yellen earlier this week.
Yellen gave a largely upbeat assessment for the U.S. economy
on Monday and said interest rate increases were coming, but
investors focused on her lack of guidance about when.
Spot gold XAU= was up 0.6 percent at $1,250.80 an ounce by
0649 GMT. It hit a high of $1,251.00 earlier in the session, its
strongest since May 23.
U.S. gold GCcv1 climbed 0.5 percent to $1,253.20.
"The direction for this week will be a little quiet (for
gold), waiting for the FOMC meeting next week. But I think
nothing is going to change due to disappointing non-farm payroll
data," said William Wong, assistant head of dealing at Wing Fung
Precious Metals in Hong Kong.
Weak U.S. payrolls data, released last week, has boosted
expectations that the Fed will stand pat on interest rates for
the time being. Gold is highly sensitive to rising rates, which
lift the opportunity cost of holding non-yielding bullion.
Gold, which slid more than 6 percent in May, has risen about
2.7 percent so far this month on dampened expectations of an
early rate hike.
The World Bank slashed its 2016 global growth forecast on
Wednesday, which could also throw cold water on a possible Fed
move.
"It boils down to how the Fed will take into consideration
this global slowdown. If they take this very seriously and show
no urgency in a rate hike then it will be a boon for gold," said
Helen Lau, an analyst at Argonaut Securities in Hong Kong.
The world's biggest consumer of the yellow metal, China,
kept its gold reserves unchanged, at 58.14 million fine troy
ounces at the end of May, from the end of April, the central
bank said on Tuesday.
Analysts, however, said China still has enormous U.S. dollar
holdings and is likely to keep purchasing gold in order to
diversify its forex reserves, which should serve as a supportive
factor for the metal.
Asian shares edged up on Wednesday, while the dollar
languished near four-week lows. MKTS/GLOB USD/
Among other precious metals, silver XAG= and palladium
XPD= touched near three-week highs, while platinum XPT=
marked its highest in two weeks.
Silver was up 1.2 percent at $16.57 an ounce, platinum rose
0.6 percent to $1,004 and palladium was 1 percent higher at
$559.87.