May 26 (Reuters) - Gold inched higher early on Thursday, but continued to linger near a seven-week low touched in the previous session as positive U.S. economic data boosted expectations the Federal Reserve would raise interest rates sooner rather than later.
FUNDAMENTALS
* Spot gold XAU= had risen 0.2 percent to $1,225.66 per ounce by 0043 GMT. The metal fell to $1,217.25 on Wednesday, the lowest since April 6.
* U.S. gold GCcv1 was up 0.2 percent at $1,225.9.
* The prospect of an early rate hike, as indicated by Fed meeting minutes released last week, and a steady dollar have pushed gold down more than 5 percent so far in May, putting it on track for its biggest monthly decline since November.
* Dallas Fed President Robert Kaplan on Wednesday said he would support raising interest rates in the "near future", though a vote by Britain on whether to leave the European Union will weigh on any Fed rate decision in June. Minneapolis Fed President Neel Kashkari said negative interest rates, used by central banks in Europe and Japan to stimulate their economies, would only be a last resort for the U.S. central bank. Pimco (Pacific Investment Management Co) Group Chief Investment Officer Dan Ivascyn said he sees a better than 50/50 chance of a Fed rate increase in June. Asian shares look set to extend their recovery from 12-week lows on Thursday after renewed optimism on European banks' prospects and a rise in oil prices to near $50 a barrel helped lift global shares. MKTS/GLOB O/R
* Confidence at Japanese manufacturers tumbled to a three-year low in May and is seen recovering only modestly in the next three months, a Reuters poll found, in a sign the yen's rise is taking its toll on exporters of cars and electronics. The yen surged in early trade on Thursday, chipping away at the recently buoyant dollar as investors looked ahead to a speech by Fed chief Janet Yellen on whether a rate increase is imminent and on a pending decision on a planned sales tax hike in Japan. USD/
* Russian precious metals and gems repository Gokhran, which is part of the finance ministry, does not need to add palladium or polished diamonds to its stocks in 2016, the country's deputy finance minister said on Wednesday. For the top stories on metals and other news, click TOP/MTL or GOL
DATA AHEAD (GMT)
1230 U.S. Durable goods orders Apr
1230 U.S. Weekly jobless claims
1400 U.S. Pending homes sales Apr