Gold prices edged higher on Thursday following a 1% drop in the previous session, while investors cautiously awaited the upcoming Federal Reserve policy meeting after the Bank of Canada raised rates to a 22-year high.
* Spot gold was up 0.3% at $1,945.60 per ounce by 0034 GM. U.S. gold futures held steady at $1,960.10.
* The Bank of Canada on Wednesday hiked its overnight rate to a 22-year high of 4.75%, and markets and analysts immediately forecast yet another increase next month to ratchet down an overheating economy and stubbornly high inflation.
* The U.S. economy is strong amid robust consumer spending but some areas are slowing down, U.S. Treasury Secretary Janet Yellen said, adding that she expects continued progress in bringing inflation down over the next two years.
* The U.S. consumer inflation report for May, due on June 13, ahead of the Fed meeting, will provide investors with more clarity about the health of the world's largest economy.
* Higher interest rates dull the appeal for zero-yield bullion.
* The Fed will not raise interest rates for the first time in more than a year at its June 13-14 meeting, according to economists polled by Reuters.
* Another Reuters poll suggested, the dollar's renewed strength against most major currencies will not fade away anytime soon, according to FX strategists, who said it would take rate cuts from the Fed to weaken the currency substantially.
* SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.37% to 934.65 tonnes on Wednesday from 938.11 tonnes on Tuesday.
* Spot silver was up 0.1% at $23.4794 per ounce, platinum rose 0.3% to $1,021.84, and palladium advanced 0.5% to $1,395.67.
DATA/EVENTS (GMT) 0130 Australia Trade Balance G&S April 0900 EU GDP Revised YY Q1 1230 US Initial Jobless Clm Weekly 1600 US Federal Reserve issues quarterly financial accounts of the United States (Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips)