* Gold ticks higher after Friday's one-percent drop
* Fed not expected to raise U.S. rates this week
* Dovish Fed comments could push gold higher - analyst
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, April 25 (Reuters) - Gold ticked higher on Monday
as the dollar gave back some of its recent gains, but caution
ahead of the Federal Reserve policy meeting later this week
curbed its advance.
The Fed is not expected to raise interest rates at this
week's meeting but markets will be looking for the U.S. central
bank's take on global economy and its monetary policy outlook.
Fed Chair Janet Yellen said last month the central bank
should proceed only cautiously as it looks to raise rates,
following its first rate hike in nearly a decade in December.
Higher rates could dent demand for non-interest-paying gold.
Spot gold XAU= rose 0.2 percent to $1,234.36 an ounce by
0640 GMT, after dropping 1 percent on Friday as the dollar
rallied.
"Should the central bank continue to hint at further rate
delays, we could see the dollar sell-off resume, in which case
most commodity markets, including gold, could push higher," said
INTL FCStone analyst Edward Meir.
"However, gold's upside will be capped by the fact that
funds will be throwing their money at various other markets that
are moving up more decisively then gold, while the continued
strength in U.S. equities will also act as another drag," he
said.
Gold has gained about 16 percent this year on speculation
that the Fed may not be able to raise rates this year on
concerns over the Chinese economy and volatility in global
markets.
Economists expect the Fed to deliver a rate hike in June,
and follow up with another by the end of this year. But interest
rate futures show less conviction, underscoring an ongoing wide
gap between markets and policymakers on the trajectory of rates.
Analysts warn gold could see more declines after Friday's
slide.
"Gold is in a corrective phase after recent gains. Each time
it has rallied to $1,270-$1,282, it has fallen back on
profit-taking, especially when the dollar has rallied," said
James Steel, analyst, HSBC.
The dollar rose to a three-week high against the yen on
Friday after a report said the Bank of Japan is considering to
expand its negative rate policy to bank loans. But it fell back
slightly on Monday, with the dollar index down 0.2 percent.
USD/
Speculators continue to bet on rising prices for gold and
silver.
Data on Friday showed that hedge funds and money managers
raised their bullish position in COMEX silver contracts to a
record high in the week to April 19, and net long positions in
gold to the highest in 3-1/2 years.
Silver XAG= rose to an 11-month top last week and was
trading below that level on Monday.
PRICES AT 0640 GMT
Metal Last Change Pct chg
Spot gold 1234.36 2.45 0.2
Spot silver 17.055 0.112 0.66
Spot platinum 1009.46 2.97 0.3
Spot palladium 601.5 1 0.17
Comex gold 1236.1 6.1 0.5
Comex silver 17.08 0.18 1.07
COMEX gold and silver contracts show the most
active months