PRECIOUS-Gold Rises to Two-Week High as U.S. Equities Drop

* Gold extends gains to fourth session

* Dollar index turns higher, limits further rise

* SPDR Gold Trust holdings drop

NEW YORK/LONDON, Oct 9 (Reuters) – Gold rose to a two-week high on Thursday as U.S. equities fell, a day after minutes of the latest U.S. Federal Reserve policy meeting prompted investors to push back their expectations for the timing of a Fed interest rate rise.

Bullion was on track for its fourth consecutive daily rise, its longest winning streak in seven months.

Traders cited heavy short-covering for gold’s rise. Fed officials want to tie an interest-rate rise to U.S. economic progress, but the minutes of their last policy meeting, released on Wednesday, show they are struggling with how to come to grips with the dual threats of a stronger dollar and a global economic slowdown.

The S&P 500 index fell nearly 1 percent on profit- taking after the U.S. equities benchmark rallied almost 2 percent on Wednesday on the Fed news.

“The stock market has backed off so that’s helping gold,” said Bill O’Neill, partner at commodities investment firm LOGIC Advisors in New Jersey.

“With the considerable number of gold shorts, I still don’t think it is poised for a major turnaround. The picture may change if the market can rise above $1,250 an ounce,” O’Neill said.

Spot gold rose to its highest since Sept. 23 at $1,233.20 an ounce early on Thursday and was trading up 0.3 percent at $1,224.86 at 11:30 a.m. EDT (1530 GMT).

It has rebounded nearly 4 percent from the 15-month low of $1,183.46 it hit on Monday on heavy selling pressure following a better-than-expected U.S. payrolls report last week.

U.S. gold futures outperformed spot, with the COMEX December futures jumping $19.10 to $1,225.10 an ounce.

Gold’s rise was limited as the dollar index rose 0.2 percent, recovering from a two-week low against a basket of major currencies after positive U.S. jobless claims data on Thursday. Source

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» Read our article: Why Silver is Going Up Today?

» Read our article: Why Gold is Going Up Today?

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