* Dollar index hovers near 5-month high
* Benchmark U.S. Treasury yield hovers around 3 percent
* Spot gold may bounce to resistance at $1,302/oz- technicals
By Apeksha Nair
BENGALURU, May 16 (Reuters) - Gold prices recovered some lost ground on Wednesday on short-covering after prices fell to the lowest level this year in the previous session on surging U.S. bond yields and a stronger dollar.
Spot gold XAU= rose 0.3 percent to $1,294.30 per ounce at 0639 GMT, after shedding 1.7 percent and marking the lowest this year at $1,288.31 in the previous session.
This was also the lowest price level for the yellow metal since Dec. 28.
U.S. gold futures GCcv1 for June delivery were up 0.3 percent at $1,293.60 per ounce.
"Rising U.S. bond yields and a stronger dollar were factors behind gold's decline below the $1,300 level. The slight pick up suggests that there might have been some opportunistic buying on the part of investors," said John Sharma, an economist with National Australia Bank.
A stronger dollar makes greenback-denominated gold more expensive for holders of other currencies, while rising U.S. yields tend to weigh on bullion's non-yielding appeal.
The dollar on Wednesday hovered near a five-month high against a group of major currencies, boosted by a surge in the benchmark 10-year Treasury yield after strong U.S. retail data on Tuesday. USD/ US/ Asian shares were under pressure after North Korea cancelled high-level talks with Seoul, denouncing military exercises between South Korea and the United States and throwing into question next month's unprecedented summit between Kim Jong Un and U.S. President Donald Trump. MKTS/GLOB global political tensions continued to provide safe-haven support to the metal, investors said the main price drivers would likely remain a stronger dollar and rising U.S. interest rates.
"There are lot of geopolitical risks but people are just used to it. Therefore it has not become a big driver for gold," said Helen Lau, analyst at Argonaut Securities.
Higher interest rates in the United States amid a rising dollar will continue to add downward pressure on gold, Lau said.
Spot gold may bounce to a resistance at $1,302 per ounce, before falling again, Reuters technical analyst Wang Tao said. other precious metals, silver XAG= was up 0.4 percent at $16.30 per ounce after falling about 1.6 percent on Tuesday in its biggest one-day percentage decline since April 23.
Platinum XPT= rose 0.4 percent to $897 an ounce, while palladium XPD= eased 0.1 percent to $981.72 an ounce after recording the biggest single-day percentage loss in two weeks at 1.3 percent in the previous session.