* Dollar near 3-1/2 month high

* U.S. 10-year Treasury yield near four-year peak

* Market looks to U.S. data on Friday

(Updates prices)

By Peter Hobson

LONDON, April 26 (Reuters) - Gold prices hovered nearfive-week lows on Thursday as higher U.S. bond yields and astronger dollar dampened interest in bullion.

Worries about the growing supply of U.S. government debt andinflationary pressures from rising oil prices this week pushedU.S. 10-year bond yields above 3 percent for the first time infour years. US10YT=RR US/

That has reduced the attraction of gold, which does not paya yield, and helped thrust the dollar to its strongest sinceJanuary, making bullion more expensive for holders of othercurrencies. .DXY USD/

Spot gold XAU= was down 0.2 percent at $1,320.21 an ounceby 1509 GMT. On Wednesday, gold touched its lowest since March21 at $1,318.51.

U.S. gold futures GCcv1 were 0.1 percent lower at$1,321.70.

Interest from physical buyers and technical support atgold's 100-day moving average of $1,319.51 was helping toprevent further falls.

"At these low (price) levels, the market could now attractsome physical buying interest," said Peter Fung, head of dealingat Wing Fung Precious Metals in Hong Kong. "The market has avery good (physical) support at around $1,310-$1,315."

Gold has been stuck in a trading range between about $1,360and $1,310 since hitting a 1-1/2 year high of $1,366.07 inJanuary.

It is supported by geopolitical uncertainty, which hasfuelled demand for gold as a safe haven, but prevented frommoving higher by fears of rising U.S. interest rates that wouldpush up bond yields and strengthen the dollar.

U.S. GDP and inflation data on Friday could give newdirection to prices, said Mitsubishi analyst Jonathan Butler.

Stronger-than-expected economic growth or inflation wouldhurt gold by bolstering expectations of more rapid increases tointerest rates.

Analysts and traders polled by Reuters this month said goldwould average $1,334 an ounce this year and $1,352 an ounce nextyear, barely shifting from its current price. urn:newsml:reuters.com:*:nL8N1S26JU

They expected silver XAG= , which was up 0.2 percent at$16.55 an ounce on Thursday, to fare better, averaging $17.28 anounce this year and $18 next year.

In other precious metals, platinum XPT= was up 0.3 percentat $906.30 and palladium XPD= slipped 0.3 percent to $973.97.

Analysts and traders polled by Reuters expected averageprices of both metals to be higher this year and next. urn:newsml:reuters.com:*:nL8N1S26GP

(Additional reporting by Swati Verma in BengaluruEditing by David Goodman and Edmund Blair) ((Peter.Hobson@thomsonreuters.com; +44 207 542 0083;))