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PRECIOUS-Gold steady as dollar licks wounds after biggest drop since June

* Cautious FOMC minutes sends dollar lower in holiday week

* Chinese stocks slide dampens risk appetite

* Markets in Japan, U.S. closed on Thursday

(Recasts, updates prices, changes dateline, adds quote/details) LONDON, Nov 23 (Reuters) - Gold steadied on Thursday, having risen nearly 1 percent in the previous session, as the dollar sank after minutes from the U.S. Federal Reserve's latest policy meeting dampened the outlook for interest rate hikes next year. The dollar nursed losses after posting its biggest drop in five months on Wednesday after the Fed minutes showed "many participants" were concerned inflation would stay below the bank's 2 percent target for longer than expected. "Gold is obviously still in need of a spark but we still see a chance of it reaching our year end target of $1,325," said Ole Hansen, head of commodity strategy at Saxo Bank. "The outlook for inflation is still low, long yields will remain subdued and then we have geopolitical risks rising this year. That's enough to prompt investors to buy gold, even though the growth outlook is still strong across the world."

Spot gold was flat at $1,292.14 per ounce by 1115

GMT.

U.S. gold futures for December delivery were flat at

$1,292. Trading was lighter than usual on Thursday, with Japanese financial markets shut for a public holiday. U.S. markets will be closed for the Thanksgiving holiday. In wider markets, Chinese stocks suffered their biggest slump in almost two years, taking the shine off another record high in the global equity bull run and offering underlying support for gold, seen as a safe haven asset. Low yielding currencies such as the Japanese yen and the Swiss Franc remained firmly supported against the dollar as investors shied away from taking positions in a holiday-shortened week. Earlier in the week, Fed Chair Janet Yellen stuck by her prediction that U.S. inflation would soon rebound, but offered an unusually strong caveat: she is "very uncertain" about this and open to the possibility that prices could remain low for years to come. A weaker dollar makes dollar-priced gold cheaper for non-U.S. investors. Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust GLD, and the largest silver-backed ETF, New York's iShares Silver Trust SLV, remained unchanged on Wednesday from Tuesday. Spot gold may test a support at $1,283 per ounce as it failed to break resistance at $1,297, according to Reuters technical analyst Wang Tao.

In other precious metals, silver slipped 0.1 percent to $17.13 an ounce, platinum fell 0.6 percent to $933 an ounce, while palladium was flat at $1,003 an ounce.

(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by Mark Potter)