* Dollar hits 2018 peak
* U.S. bond yields slip from highs
* Gold fell 1.7 pct on Tuesday
* Technicals suggest further losses (Updates prices, headline; adds comment, second byline, NEW YORK to dateline)
By Renita D. Young and Peter Hobson
NEW YORK/LONDON, May 16 (Reuters) - Gold prices rebounded from a 4-1/2-month low on Wednesday on short-covering as the U.S. dollar came off its 2018 highs and U.S. bond yields sat near multi-year peaks.
Spot gold XAU= was 0.2 percent higher at $1,292.19 by 1:39 p.m. ET (1739 GMT), having gone as low as $1,286.20, its weakest since Dec. 27.
U.S. gold futures GCcv1 for June delivery settled up $1.20, or 0.1 percent, at $1,291.50 per ounce.
"A lot of people are trying to cover shorts from the break at the $1,316 level. That was a good area people were betting for the downside," Michael Matousek, head trader at U.S. Global Investors.
"Now you want to start taking some profits, because statistically, it looks like it can bounce from the short-term."
Gold prices barely responded to North Korea saying it might not attend the unprecedented June 12 summit with the United States if Washington continues to insist that it unilaterally give up its nuclear weapons. North Korea also called off high-level talks with South Korea scheduled for Wednesday, blaming U.S.-South Korean military exercises. higher 10-year Treasury yields, which stayed near highs hit on Tuesday, capped gold's gains, traders said, as the U.S. dollar came off its highs. weaker dollar makes gold less expensive for holders of other currencies, but higher U.S. bond yields make non-yielding bullion less attractive to investors.
Bullion had suffered its biggest single-day loss since November 2016 when it fell 1.7 percent on Tuesday to below the 200-day moving average and the psychologically significant $1,300-an-ounce level. .DXY USD/ US/
Gold is likely to fall to $1,275 by the end of June and $1,250 by the end of the year as U.S. yields and the dollar strengthen, said ABN AMRO (AS:ABNd) analyst Georgette Boele. That is below the $1,310-$1,360 range gold has inhabited since January.
"It held up for so long on such a high level. Now you are below $1,300 and the 200-day moving average; people who hold long positions are a little bit nervous," she said.
Technical and momentum indicators suggested that gold could fall to about $1,278, ScotiaMocatta analysts said. Fibonacci support for the metal was at $1,287, they added.
In other precious metals, silver XAG= was up 0.9 percent at $16.37 an ounce after dipping to a two-week low, $16.17.
Platinum XPT= eased by 0.4 percent at $889.07 per ounce, while palladium XPD= gained 0.4 percent at $986.75, earlier dipping to $883.50, a five-month low.