(Corrects third paragraph to show U.S. futures were up, not down)
* Dollar dip takes downward pressure off gold
* Largest gold ETF reports biggest outflow in a month
* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
By Jan Harvey and Zandi Shabalala
LONDON, Aug 9 (Reuters) - The price of gold rose on Tuesday as the dollar edged lower against a basket of currencies and concerns over the global economic outlook trumped some expectations that the U.S. Federal Reserve could raise interest rates this year.
The rise for gold picked up momentum after it broke above a key chart level just below $1,335 an ounce, analysts said.
Spot gold XAU= was up 0.5 percent at $1,341.71 an ounce at 1412 GMT, off an earlier low of $1,330.03, while U.S. gold futures GCv1 for December delivery were up $6.50 an ounce at $1,347.80.
The metal slipped to its lowest level in a week on Monday, under pressure after forecast-beating U.S. non-farm payrolls employment data on Friday revived speculation that the Fed could press ahead with a rate hike. However, it quickly found support.
"There is still a view that we could see a rate hike this year but there are enough risk issues out there to justify holding gold," Citigroup (NYSE:C) analyst David Wilson said.
CME Group's Fed Watch tool showed traders see almost a 50-50 chance of a U.S. rate hike by December, compared with 30 percent before the payrolls data. is highly sensitive to rising U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.
Fed policymaker Jerome Powell was quoted as saying on Monday that the U.S. economy is at increasing risk of becoming trapped in a prolonged phase of slow growth that points to a need for lower interest rates than previously expected. interest in gold-backed exchange-traded funds was less buoyant than in recent months. The largest, New York-listed SPDR Gold Shares GLD , reported a 6.5-tonne outflow on Monday, its largest in a month. GOL/ETF
Trade in the major Asian gold markets was quiet overnight, MKS said in a note, with light demand again from the onset countered by diminished COMEX selling.
"The Shanghai Gold Exchange open provided little in the way of direction, investors on the exchange being light buyers although the premium had moved right back into neutral territory around $1.00 over the loco London price," it said.
Among other precious metals, silver XAG= was up 0.8 percent at $19.86 an ounce after touching a near two-week low on Monday. Platinum XPT= was 0.3 percent higher at $1,154.99.
Palladium XPD= , which earlier touched a two-week low at $683.53, was up 0.6 percent at $692.97.
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