* Palladium hits record high of $1,263.44/oz
* Platinum declines to lowest in 2-1/2 months
* Gold down after rising for last two sessions
By Swati Verma
BENGALURU, Dec 5 (Reuters) - Gold prices edged lower on Wednesday,
a day after hitting their highest level in more than five weeks, as
comments from a Federal Reserve official kept alive the prospect of
gradually rising U.S. interest rates.
Meanwhile, palladium hit a new record high of $1,263.44 an
ounce, widening its premium over gold to around $25, helped by a
sustained supply deficit and increased speculative interest. It was
2.1 percent higher at $1,259.05 per ounce by 1435 GMT.
Spot gold was down 0.1 percent at $1,237.31 per ounce, after
hitting its highest since Oct. 26 at $1,241.86 on Tuesday. U.S. gold
futures were down 0.3 percent at $1,243.20 per ounce.
"The U.S. Federal Reserve talking about the gradual increase
in rates is going against some of the expectations that have been
building up recently," said Saxo Bank analyst Ole Hansen.
The U.S. central bank has increased interest rates three times
this year but concerns about weaker growth have stoked bets that the
Fed will end its tightening campaign sooner than previously thought.
However, New York Fed President John Williams on Tuesday said the
Federal Reserve should expect to continue raising interest rates
"over the next year or so" even while it pays close
attention to possible risks highlighted by financial markets.
The central bank is widely expected to raise rates at its policy
meeting on Dec. 18-19 and investors are keeping a close eye on signals
for the future path of interest rates next year.
Higher interest rates increase the opportunity cost of holding
World stocks tumbled to one-week lows on Wednesday, as declines by
long-dated U.S. bond yields and a renewal of trade concerns stoked
fears of a downturn in the United States, the world's biggest economy,
and pressured the dollar.
Gold prices have recovered about 7 percent from 19-month lows hit
"The momentum certainly appears to be with the bulls at the
moment, especially if the dollar remains under pressure in the
aftermath of the trade war truce," Craig Erlam, an analyst at
OANDA, wrote in a note.
"I think a move back towards $1,260 and even $1,280 is
perfectly feasible in the coming weeks."
In other precious metals, spot silver was steady at$14.52 per
ounce. Platinum fell 1.4 percent at $792 per ounce after hitting
its lowest since Sept. 17 at $787 earlier in the session.
(Reporting by Swati Verma and Eileen Soreng in Bengaluru; Editing by
Kirsten Donovan and Mark Potter)
((Swati.Verma@thomsonreuters.com; within U.S. +1 651 848 5832,
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