LONDON- Gold steadied on Thursday below a two-week high hit in the previous session as the dollar slid after the U.S. Federal Reserve showed a less hawkish stance on rates than expected.

The Fed raised its key rate by 25 basis on Wednesday and flagged at least two more increases this year, but stopped short of pointing to three increases that some economists predicted.

The dollar dropped to a month low versus a currency basket on Thursday, before recovering slightly and moving into positive territory. A stronger dollar makes dollar-priced gold costlier for holders of other currencies.

Although the Fed outlook for 2018 was seen as bearish, the central bank was otherwise upbeat on the economy, revising up rate projections for 2019 and 2020 and raising the estimated longer-term "neutral" interest rate a touch.

"(Gold's) initial reaction to the Fed was positive, but then reading through to 2019 and 2020 you see potentially a faster pace of (rate) tightening, so its like giving with one hand and taking away with the other," ICBC Standard Bank analyst Tom Kendall said.

"Gold is doing pretty well to be trading where it is. You've got conflicting signals on the macro-economic and political side, and softening (physical) demand, so net net gold is comfortable in its existing range," he added.

Spot gold dipped 0.1 percent to $1,330.97 per ounce at 1250 GMT. Prices rose to a two-week high of $1,336.59 on Wednesday, and also registered their biggest single-day percentage gain since May 17, 2017.

U.S. gold futures for April delivery rose 0.7 percent to $1,331 per ounce.

In the wider market, Europe's main share indexes were in the red amid the threat of a global trade war, with Beijing bracing for new tariffs from U.S. President Donald Trump on some $60 billion worth of Chinese imports. 

"We expect the prospect of a trade war between the U.S. and other economies to put a floor under gold prices in the short term but ultimately we think that Fed tightening will prove too strong a headwind," Capital Economics analyst Simona Gambarini told the Reuters Global Metals Forum.

"Considering that the Fed just hiked interest rates for the sixth time in this tightening cycle and revised up its rate expectations for 2019, the price of gold is faring quite well," she added.

Spot silver was flat at $16.53 per ounce, while platinum XPT= fell 0.1 percent to $953.40.

Palladium fell 0.4 percent to $984.72 per ounce.

(Additional reporting by Eileen Soreng Editing by Jon Boyle and Edmund Blair) ((maytaal.angel@thomsonreuters.com(00442075429105)(Reuters Messaging: maytaal.angel.thomsonreuters.com@reuters.net) ))