* Gold retreats after Tuesday's 1.8 pct rally
* Dollar turns lower against currency basket
* Gold price holds losses after Fed minutes released
* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC (Rewrite throughout, updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, April 6 (Reuters) - Gold fell 1 percent on Wednesday as a recovery in equities prompted some profit-taking after Tuesday's rally, while minutes of the U.S. Federal Reserve's last policy meeting showed concern about "appreciable downside risks" in the global economy.
Fed policymakers debated whether an interest rate hike would be needed in April, though a consensus emerged that risks from a global economic slowdown warranted a cautious approach, minutes from the March 15-16 meeting showed. stutter-stepped on the March minutes, initially dropping nearly half a percent on the headline that two members wanted to hike though there was only one official dissent, but took back its losses as the rest of the minutes indicated caution and reiterated concern that rates were at such a low level that there was little room to cut if economy faltered," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
Gold, which is sensitive to rate increases as they lift the opportunity cost of holding the non-interest-yielding metal, posted its biggest quarterly rise in nearly 30 years in the first three months of 2016 as expectations for rate rises faded.
Spot gold XAU= was down 0.6 percent to $1,223.73 an ounce at 2:39 p.m. EDT (1839 GMT) after falling 1.1 percent. U.S. gold futures GCv1 for June delivery settled down 0.5 percent at $1,223.80 an ounce.
"The balance of (the) committee appears committed to patience in raising rates, which implies very little chance of an April rate increase and could perhaps reduce market assessment of a potential rate increase at the June meeting," said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management in Seattle.
"This dovish bias is constructive for the gold market, especially with risks of further monetary easing in Europe and Japan."
The U.S. dollar hit a fresh 17-month low against the yen and turned lower against a basket of major currencies .DXY . USD/
"The FOMC committee needs to show solidarity with respect to a rate hike, and as long as we are lacking that, their message will be vague and spawn more volatility," Ava Trade's chief market analyst Naeem Aslam said prior to release of the minutes.
Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares GLD , fell on Tuesday. It reported this year's first weekly outflow last week. GOl/ETF
Among other precious metals, silver XAG= was down 0.3 percent at $15.08 an ounce, platinum XPT= was down 0.5 percent at $945.30 and palladium XPD= was down 0.6 percent at $540.
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