By Clara Denina
LONDON (Reuters) - Gold edged higher on Thursday as the dollar's rally paused, moving away from a seven-week low hit in the previous session, though gains were limited by expectations that U.S. interest rates could rise as early as June.
Spot gold rose 0.2 percent to $1,226.06 an ounce by 1226 GMT. The metal fell to its lowest since April 6 at $1,217.25 on Wednesday. U.S. gold was also up 0.2 percent at $1,226.30.
"Gold has entered a phase of consolidation due to stronger views that the U.S. Fed will raise rates this summer," said Carlo Alberto de Casa, chief analyst at ActivTrades.
"Today we are just seeing a technical rebound after the metal touched $1,217 yesterday, where the next chart support stands."
The prospect of an interest rate rise, as indicated by U.S. Fed meeting minutes released last week, and a strengthening dollar have pushed gold down 5 percent so far in May, putting it on track for its biggest monthly decline since November.
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Higher interest rates increase the opportunity cost of holding non-interest yielding gold.
Dallas Fed President Robert Kaplan said on Wednesday that he would support raising interest rates in the "near future", though a vote by Britain on whether to leave the European Union will weigh on any Fed rate decision in June.
The market will also monitor Fed Chair Janet Yellen's comments at a panel event hosted by Harvard University on Friday.
The dollar index inched down 0.1 percent, moving away from a two-month high of 95.661 in the previous session and making gold cheaper for holders of other currencies. [FRX/]
European shares were mixed on Thursday, with banks on the back foot after a recent rally while commodity stocks were boosted as Brent crude oil prices hit $50 a barrel for the first time since November. [.EU]
Investors will be looking for cues from U.S. weekly unemployment data and pending April home sales figures scheduled for release later in the day.
Top consumer China's gold imports via main conduit Hong Kong dipped in April from a three-month high in the previous month, data showed on Thursday.
Among other precious metals, spot silver rose 1.1 percent to $16.40 an ounce, platinum gained 1.2 percent to $1,000.25 and palladium jumped by 3 percent to $542.22.
(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by David Clarke and David Goodman)