* Gold range-bound on U.S. Fed rate-hike bets

(Updates throughout, adds comment)

By Zandi Shabalala

Oct 25 (Reuters) - Gold rose on Tuesday as the dollar eased from nine-month highs but an increasing probability of a U.S. interest rate hike kept a lid on prices.

The metal is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets while boosting the dollar.

Spot gold XAU= was up 0.4 percent at $1,269.05 an ounce at 0915 GMT. It has traded in a narrow $6.60 per ounce range for the past five sessions.

The dollar index .DXY , which measures the greenback against a basket of currencies, slipped 0.1 percent to 98.68, after hitting a nine-month high on Monday. USD/

U.S. gold futures GCcv1 were up 0.4 percent at $1,267 an ounce.

"What has been interesting in gold recently has been the rise in the dollar but we seem to have found a new level for the dollar and so you see gold stabilising," Danske Bank senior analyst Jens Pedersen said.

"We need to monitor economic data ahead of the Fed's decision because it's an ongoing battle between the hawks and the doves right now and also how to interpret the data."

Chicago Fed President, Charles Evans, said on Monday the U.S. central bank will raise its policy rate three more times by the end of next year, if inflation expectations and the labour market continue to improve.

A Markit survey of U.S. manufacturing climbed to a one-year top of 53.2, while business activity in Europe expanded at the fastest pace this year so far in October.

In technicals, support for gold appears to be between $1,250 and $1,260, which restricts downside moves, MKS Pamp said in a note.

"With the market pricing in a 70 percent chance of a U.S. rate rise this December it is difficult to see the yellow metal pulling too far away from these levels over the short term," the precious metals trader added.

Silver XAG= was up 0.9 percent at $17.71 an ounce. It touched a more than two-week high of $17.88 in the previous session.

Platinum XPT= was up about 1.5 percent at $950.75 an ounce, while palladium XPD= was up 1.2 percent at $638.50. (Additional Reporting by Apeksha Nair in Bengaluru; Editing by Susan Thomas) ((zandi.shabalala@thomsonreuters.com; +44 207 542 5937; Reuters Messaging: zandi.shabalala.thomsonreuters.com@reuters.net))