(Adds 1 pct jump in prices, trader comments)
By A. Ananthalakshmi
SINGAPORE, Feb 17 (Reuters) - Gold jumped 1 percent on Wednesday, snapping a three-day losing streak to trade above the key $1,200-an-ounce level as Asian shares and the dollar slid.
Bullion rallied to a one-year high last week after a stock market rout boosted demand for the yellow metal as a safe haven, but has since given up some gains as equities steadied.
With stocks slipping again on Wednesday, gold was back in favour. Asian shares eased after two sessions of solid gains, while safe-haven yen retook some lost ground against the dollar.
Spot gold XAU= hit a session high of $1,212.20, before paring some gains to trade up 0.9 percent at $1,211.20 by 0757 GMT. It lost 3.7 percent in the previous three sessions.
"Gold price action followed the dollar almost tick-for-tick," said MKS Group trader Alex Thorndike.
Short covering and cautious comments from Federal Reserve officials about future U.S. interest rate hikes also helped gold move above $1,200, he said.
Investors will be eyeing the minutes of the Fed's Jan. 26-27 meeting to be released later on Wednesday for clues about the U.S. central bank's outlook on interest rates.
Speculation has increased in recent days that the Fed might resort to negative interest rates to stimulate the economy after Fed Chair Janet Yellen said last week it was an option that would not be taken "off the table." Tuesday, the Fed's Neel Kashkari said he sees a gradual increase in interest rates, while Philadelphia Fed President Patrick Harker said the Fed may be wise to await more evidence of higher U.S. inflation before raising rates again.
Boston Fed President Eric Rosengren said the central bank should be "unhurried" as it considers when to again hike interest rates given problems overseas and financial market volatility.
Lower or negative rates would boost demand for non-interest-paying gold.
Concerns remain that gold could correct further as some analysts say gold gained too much, too quickly.
"Gold's price performance thus far this year... could prove to be unsustainable," Societe Generale (PA:SOGN) analyst Robin Bhar said in a note on Tuesday.
Fears over the global economy are likely to fade and U.S. interest rate hikes will return to the agenda, hurting bullion, Bhar said.
John Paulson, one of the world's most influential gold investors, slashed his bets on bullion at the end of last year by cutting his stake in the top gold-backed exchange traded fund by 37 percent, a federal filing showed on Tuesday. AT 0757 GMT Metal
Last
Change Pct chg
Spot gold
1211.2
11.24
0.94 Spot silver
15.323
0.098
0.64 Spot platinum
938
11.01
1.19 Spot palladium
513.46
8.41
1.67 Comex gold
1211.6
3.4
0.28 Comex silver
15.35
0.016
0.1
COMEX gold and silver contracts show the most active months
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http://reut.rs/1WAiOSC
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