By Jan Harvey
LONDON (Reuters) - Gold prices edged higher on Thursday, recovering from near six-year lows as the dollar took a breather after a run of gains, though the precious metal remained under pressure from expectations a U.S. rate hike is imminent.
Federal Reserve officials on Wednesday continued to flag December as a likely time for U.S. interest rates to rise after seven years near zero.
Rising rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Spot gold was up 0.3 percent at $1,073.50 an ounce at 1057 GMT, while U.S. gold futures for December delivery were up $4.20 at $1,072.90. The metal hit its weakest since February 2010 on Wednesday at $1,064.85.
"Physical demand is not all that bad," MKS' head of trading Afshin Nabavi said. "I think if the U.S. dollar sees a bit of correction on the downside, gold ought to see some short covering towards the $1,095 area."
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"The market feels as though should be able to test the $1,090-1,095 level, but it's all a question of dollar strength."
The dollar edged lower against a basket of currencies on Thursday, with some analysts arguing that it will now take more than next month's expected action on euro zone and U.S. monetary policy to drive the U.S. unit higher.
World shares and risk assets rallied after the Fed flagged a rate hike next month, but also an intention to take things slow and steady after that.
Minutes of the Fed's last policy meeting showed most members were ready to sanction the bank's first rise in rates in almost a decade in December as long as further moves then depended on the economy continuing to perform well.
Expectations for a rate rise have been a major factor pushing gold prices down 9 percent this year.
"It is possible that the gold market has largely factored in a rate rise," HSBC said in a note. "This leads us think gold is likely to trade sideways to slightly higher, at least in the near term."
South Africa's Gold Fields Ltd is considering putting its Damang mine in Ghana "under care and maintenance" until gold prices recover, the bullion producer said on Thursday.
Silver was up 0.1 percent at $14.18 an ounce, while platinum was up 0.4 percent at $851.10 an ounce and palladium was up 0.3 percent at $534.97 an ounce.
Platinum is recovering after hitting its lowest since December 2008 on Wednesday, at $840.40 an ounce.
(Additional reporting by Melanie Burton in Melbourne, editing by William Hardy)