* Gold to drift down to $1,200 in three months -analyst
* Fed July meeting minutes due at 1800 GMT
* Palladium hits over 1-week low
(Adds comments, updates prices, changes dateline from BENGALURU) LONDON, Aug 16 (Reuters) - Gold fell on Wednesday for the third straight day as the dollar edged higher on the back of robust U.S. economic data and an easing in tensions over North Korea.
Spot gold had slipped 0.1 percent to $1,270.20 per
ounce by 1040 GMT, continuing to move away from a two-month peak of $1,289.73 touched on Monday.
U.S. gold futures for December delivery fell 0.3
percent at $1,276 an ounce. Gold had rallied after a war of words between U.S. President Donald Trump and North Korea's leader about Pyongyang's development of nuclear missiles. But in an example of how tension has subsided in recent days, the United States' top general said both countries share a commitment to work through difficult issues. "No matter what you think about Trump, he still wants to avoid a military confrontation with North Korea," said analyst Carsten Menke at Julius Baer in Zurich. "And based on that working assumption, we see gold prices moving lower rather than higher for the next couple of weeks." Prices are forecast to move back to the lower end of its range at around $1,200 in three months, Menke added.
Also pressuring bullion was a firmer dollar index ,
which held near a three-week high on Wednesday as strong U.S. retail sales a day earlier boosted risk appetite. Investors were also anticipating minutes of the Federal Open Market Committee meeting due later in the day. "The increasing odds of the U.S. interest rate hike could push the gold price below the $1,250 level and this could happen if the upcoming FOMC minutes deliver some hawkish tone," said Naeem Aslam, chief market analyst at Think Markets. Higher interest rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies.
Among other precious metals, silver added 0.4 percent at $16.66 per ounce and platinum rose 0.7 percent to
$963.90 per ounce.
Palladium gained 0.9 percent to $893.42 after
touching its lowest in over a week earlier in the session.
(Additional reporting by Apeksha Nair and Arpan Varghese in Bengaluru; Editing by Subhranshu Sahu and David Evans)