PRECIOUS-Gold up as U.S. Treasury yields weaken, dollar eases

* U.S. yield curve flattest since Dec 2007 on hawkish Fed

* Dollar index drifts away from 1-month high

* Spot gold may bounce to $1,257-$1,261 an ounce range -technicals

(Updates with quotes, prices) BENGALURU, June 22 (Reuters) - Gold prices rose for a second straight day on Thursday, supported by an easing dollar and weakness in U.S. Treasury yields. The U.S. Treasury yield curve flattened to almost 10-year lows on Wednesday as investors evaluated the impact of hawkish Federal Reserve policy on the economy even as inflation measures are deteriorating. Gold is highly sensitive to rising rates and yields, which increase the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.

Spot gold rose 0.5 percent to $1,252.30 per ounce at

0423 GMT. It rose 0.3 percent in the previous session, its largest intra-day percentage change since June 6.

U.S. gold futures for August delivery rose 0.6

percent to $1,253.20 per ounce. "The primary driver appears to be the flattening of the longer-dated U.S. Treasury curve," said Jeffrey Halley, senior market analyst at OANDA. "The uncontrolled oil price spill in the futures markets may have seen some traders pushing the risk aversion button and buying gold," Halley added. Oil prices rose on Thursday but worries over whether OPEC-led output cuts would be able to rein in a three-year glut continued to keep prices around 10-month lows. Spot gold may bounce more into a range of $1,257 to $1,261 per ounce, as it has cleared a resistance at $1,251, according to Reuters technical analyst Wang Tao.

The U.S. dollar slipped 0.1 percent against a basket

of six major currencies, retreating from a one-month high of 97.871 set on Tuesday. The easing in dollar prices, especially its weakness against the yen is supporting gold, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "Investors are waiting for any clues on whether the timing of the next rate hike is September or December. The economic data coming out of U.S. over the next two months will be crucial," he added. U.S. home resales unexpectedly rose in May to the third highest monthly level in a decade and a chronic inventory shortage pushed the median home price to an all-time high.

Holdings in SPDR Gold Trust , the world's largest

gold-backed exchange-traded fund, rose 0.04 percent to 853.98 tonnes on Wednesday.

Among other precious metals, silver gained 1 percent to $16.60 per ounce. Platinum touched its highest in a

week during the session and was up 0.5 percent at $928.50 per

ounce, while palladium slipped 0.4 percent to $884.75 per


(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by Joseph Radford and Richard Pulin)