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PRECIOUS-Gold steadies as oil plunge dampens U.S. rate hike expectations

* Oil price fall reduces inflation expectations

* Longer-dated U.S. bond yields fall

* Dollar weakens from 1-month high

* Technical support at $1,237

(Updates prices, adds palladium comment) LONDON, June 21 (Reuters) - Gold steadied on Wednesday after sliding to a five-week low in the previous session as a slump in oil prices pushed down stock markets and the U.S. dollar weakened, making bullion cheaper for holders of other currencies. Longer-dated U.S. bond yields were also at seven-month lows as investors bet that lower oil prices would reduce inflationary pressures and make it less likely that the U.S. Federal Reserve will push ahead with rapid interest rate rises. Gold is highly sensitive to rising rates and yields, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced. "The change in sentiment has helped gold," ABN AMRO analyst Georgette Boele said.

Spot gold was flat at $1,243.21 an ounce at 1416 GMT, while U.S. gold futures were up 0.1 percent at $1,244.50

an ounce. Gold has fallen around 4 percent from a high of $1,295.97 early this month. But traders were sceptical that gold had hit bottom. "Momentum certainly seems to be lower for the moment," said MKS PAMP trader Alex Thorndike in a note. "(But) there does seem to be a little renewed buying interest below $1,250, so we feel a period of consolidation is likely," he added. Strong technical support at the 200-day moving average at around $1,237 would provide the floor from which gold could climb back towards $1,275, said Boele. Analysts at Standard Chartered said in a note they expected the Fed to raise rates twice, rather than three times, next year and the gold price should rise to $1,300 by the end of 2017. Several Fed officials have said the bank should push ahead with rate rises, but the head of the Chicago Federal Reserve said on Tuesday he was increasingly concerned that soft inflation meant the bank would struggle to get price pressures back to its 2 percent objective.

In other precious metals, silver was down 0.3 percent

at $16.41 an ounce, just above a six-week low hit in the

previous session, while platinum was up 0.2 percent at

$920.50 an ounce

Palladium was 1.3 percent higher at $879.25 an ounce,

its second day of gains after it fell back from a 16-year high on June 9 of more than $900. The metal used for emission-controlling catalytic converters in petrol vehicles is benefiting from a shift away from diesel cars, said Natixis analyst Bernard Dahdah. "I think there is going to be a correction to closer to $780, but that doesnt mean that we are not bullish," he said.

(Reporting by Peter Hobson, editing by David Evans, Susan Thomas and Pritha Sarkar)