By Jan Harvey
LONDON (Reuters) - Gold eased on Tuesday as speculation that the U.S. Federal Reserve could raise rates this year undermined interest in the metal, though uncertainty kept prices in a narrow range.
CME Group's Fed Watch tool showed traders see almost a 50-50 chance of a U.S. rate hike by December, compared with 30 percent before a forecast-beating non-farm payrolls report on Friday last week.
Gold is highly sensitive to rising U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.
Spot gold was down 0.2 percent at $1,333.02 an ounce at 1125 GMT, while U.S. gold futures for December delivery were down $2.40 an ounce at $1,338.90. Spot gold touched a one-week low of $1,329.55 on Monday.
"Gold has overall settled into a higher range between $1,335 and $1,365," Saxo Bank's head of commodities research Ole Hansen said.
"I think we are waiting for clues, especially from the dollar, with investors still being bullish but not prepared to take it higher without the support of a weaker dollar."
The dollar was little changed against a currency basket on Tuesday. Stock markets rose as investors sought yield. [MKTS/GLOB] [FRX/]
While resurgent interest in stocks weighed on prices, gold remained in a narrow range as uncertainty over the pace of rate hikes persisted.
Fed policymaker Jerome Powell was quoted as saying on Monday that the U.S. economy is at increasing risk of becoming trapped in a prolonged phase of slow growth that points to a need for lower interest rates than previously expected.
Investment interest in gold-backed exchange-traded funds was less buoyant than in recent months. The largest, New York-listed SPDR Gold Shares, reported a 6.5-tonne outflow on Monday, its largest in a month. [GOL/ETF]
Trade in the major Asian gold markets was quiet overnight, MKS said in a note, with light demand again from the onset countered by diminished Comex selling.
"The Shanghai Gold Exchange open provided little in the way of direction, investors on the exchange being light buyers although the premium had moved right back into neutral territory around $1.00 over the loco London price," it said.
Among other precious metals, silver was down 0.1 percent at $19.69 an ounce after touching a near two-week low on Monday. Platinum was 0.5 percent lower at $1,143.45.
Palladium, which earlier touched a two-week low at $683.53, was down 0.4 percent at $689.80.
(Additional reporting by Nallur Sethuraman in Bengaluru; Editing by Dale Hudson and Jane Merriman)
