PRECIOUS-Gold eases on firm dollar; palladium hovers near record

* Dollar hovers close to a near two-week peak
* Palladium soared to a record high in the last session
* Silver, platinum off more than two-month highs hit on
Tuesday

(Updates prices)
By Sethuraman N R
May 5 (Reuters) - Gold prices edged lower on Wednesday as
the possibility of higher U.S. interest rates supported the
dollar, while palladium held near record highs hit in the
previous session amid supply worries.
Spot gold XAU= was down 0.1% at $1,776.61 per ounce by
1223 GMT, after falling about 0.8% in the previous session. U.S.
gold futures GCv1 were steady at $1,776.20.
"The dollar index bounced back last week and has generally
risen this week. That's kind of providing some downward pressure
on gold prices," said Fawad Razaqzada, analyst with
ThinkMarkets.
"Treasury Secretary Janet Yellen clearly said that rates
need to go up higher at some point of time. The key question is
how fast they will rise as the Federal Reserve has remained
quite dovish."
The dollar index .DXY was hovering close to a near
two-week peak against its rivals. USD/
Yellen on Tuesday said she saw no inflation problem brewing,
downplaying earlier comments that rate increases may be needed
to stop the economy overheating as U.S. President Joe Biden's
spending plans boost growth. Higher interest rates dull gold's appeal as it increases
the opportunity cost of holding non-yielding bullion.
Meanwhile, investors await U.S. services data on Wednesday
and April payrolls on Friday for cues on the health of the U.S.
economy. Elsewhere, palladium XPD= rose 0.4% to $2,996.36 per
ounce, after hitting an all-time high of $3,017.18 in the
previous session, driven by concerns of a shortage of the metal.
Palladium, used mainly in emission-reducing auto catalysts
for vehicles, has risen more than 22% so far this year.
Silver XAG= was down 0.9% at $26.28, while platinum XPT=
fell 1.1% to $1,223.73. Both the metals hit their highest level
in more than two months on Tuesday.
"A rebound in industrial activity will bode well for the
demand for silver," said Nitesh Shah, director, research,
WisdomTree.