* Gold flat after 1.2 percent drop on Monday
* Dollar down after Fed's Dudley comments
* Fed minutes on Wednesday in focus
LONDON, Nov 19 (Reuters) - Gold inched down on Tuesday, struggling to stabilise after sharp losses seen in the previous session, as investors gauged Federal Reserve officials' comments about the outlook for easy monetary policy and the strength of the U.S. economy.
Federal Reserve Bank of New York President William Dudley said he was "more hopeful" about the U.S. economy but also that he expected "very accommodative" monetary policy to be in place "for a considerable period of time".
Spot gold was down 0.3 percent at $1,270.51 an ounce at 1126 GMT, after dropping 1.2 percent on Monday on lacklustre physical buying and gains in the stock markets, which diverted investment interest from bullion.
Technical support was pegged at the recent low of $1,261, while a breach of the mid-October low of $1,251 would see the metal dropping further to June near-three-year lows of $1,180, ScotiaMocatta said in a note.
U.S. gold futures for December delivery fell 0.2 percent to $1,270.30 an ounce.
"The latest comments from Fed officials raised again concerns that the FOMC might not taper in December but this uncertainty is likely to remain in the market until the decision is finally made," Quantitative Commodity Research owner Peter Fertig said.
The dollar fell against a basket of currencies, while U.S. Treasury yields were steady at 2.69 percent.
Gold had been boosted last week by comments from Janet Yellen, the Federal Reserve's chief in waiting, indicating she would continue the U.S. central bank's ultra-easy monetary policy. The Fed's $85 billion in monthly bond purchases has been have been a major support for gold prices in recent years as a hedge against inflation.
Investors were looking ahead to the release on Wednesday of minutes from the Fed's October meeting.
"I don't expect the minutes to bring any new information which would alter the picture but you never know how the market reacts," Fertig said.
Investor sentiment continued to remain bearish amid stronger stock markets. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.2 tonnes to 864.51 tonnes on Monday - the fund's lowest since February 2009.
Physical demand, which usually tends to provide a floor for prices at lower levels, failed to emerge in a robust manner even after Monday's price drop.
Demand has lately failed to pick up even below the $1,300 level as consumers had bought a lot of bullion when prices fell earlier in the year.
"We do not expect any serious upside without meaningful physical flows and given little investor interest at the moment," VTB Capital said in a note.
"A stronger dollar could still add pressure to prices and we do not exclude more losses later in the week should the dollar rebound strongly," it added.
Silver declined for a second session, down 0.4 percent at $20.29 an ounce.
Spot platinum was up 0.1 percent at $1,408.99 an ounce. Spot palladium was unchanged at $714.15 an ounce.