(Updates prices)
* Spot gold may retrace to $1,232/oz - technicals
* Gold seems vulnerable for remainder of year - analyst
By Karthika Suresh Namboothiri
BENGALURU, Dec 20 (Reuters) - Gold prices edged higher on Thursday supported by a softer dollar and weakness in the equities market, after the U.S. Federal Reserve delivered a less-dovish outlook on monetary tightening than many had expected.
In a widely anticipated decision, the U.S. central bank hiked interest rates by 25 basis points on Wednesday. But what took markets by surprise was the Fed's commitment to retain the core of its plan to tighten monetary policy, despite rising uncertainty about global economic growth. gold XAU= rose 0.5 percent to $1,249.46 per ounce at 0900 GMT, after declining the most since Nov. 27 in the previous session.
Prices crossed the 200-day moving average around $1,252 an ounce before the Fed's statement on Wednesday.
U.S. gold futures GCcv1 declined 0.3 percent to $1,252.80 per ounce on Thursday.
"There is some safe-haven buying supporting gold prices today," said Renisha Chainani, head of commodity and currency research at Monarch Networth Capital.
"Overall there is risk-off sentiment in the market."
The dollar .DXY , which measures the greenback against a basket of six major currencies, was down 0.5 percent, while Asian shares slid as Fed's statement dashed investor hopes for a more dovish policy outlook. USD/ MKTS/GLOB
As investors flocked to the safety of government bonds, U.S. benchmark Treasury yields fell to more than eight-month lows on Wednesday. US/
"The rate hike announcement has put pressure on gold. There is some good support at $1,230-$1,235," said a trader based in Hong Kong, adding that in the near-term, the dollar index was going to be a "good proxy" for what gold is going to do.
Gold is sensitive to higher interest rates because they boost the dollar, making bullion more expensive for buyers using other currencies.
Spot gold may retrace to $1,232 per ounce, following its failure to break a resistance at $1,253, according to according to Reuters technical analyst Wang Tao. seems vulnerable for the remainder of the year, although the absence of fresh fodder driving the Fed outlook narrative will probably keep trend progression modest," said Ilya Spivak, a currency strategist for DailyFX.
Amongst other precious metals, palladium XPD= rose 0.2 percent to $1,262.00 per ounce.
Silver XAG= rose 0.3 percent to $14.64 per ounce, while platinum XPT= rose 0.4 percent to $789.00 per ounce.