PRECIOUS-Gold hovers around $1,200 level as robust dollar weighs

(Updates prices, adds comments)

* Gold holds near one-month low

* Silver drops to lowest since January 2016

Nov 14 (Reuters) - Gold held steady on Wednesday, moving in a tight range around the $1,200-per-ounce level as prospects of rising U.S. interest rates kept the dollar near 16-month peak, making bullion more expensive for holders of other currencies.

Spot gold was up 0.4 percent at $1,202.51 per ounce

at 12:20 p.m. EST (1720 GMT). Prices had slipped to their lowest since Oct. 11 at $1,195.90 in the previous session. U.S. gold

futures gained 0.2 percent to $1,203.30 per ounce.

Gold was helped by a slight retreat in the dollar index , which measures the greenback against a basket of major currencies. "The key driver in the near term continues to be currency movements," said Suki Cooper, precious metals analyst at Standard Chartered Bank. Factors including increased buying by central banks, the return of interest amongst exchange-traded fund (ETF) investors and seasonal demand for physical gold "are acting as a cushion to the downside," she added. Holdings of the world's largest gold-backed ETF, SPDR Gold

Trust , remained near their highest level in more than two

months. Concerns about a possible slowdown in global economic growth, exacerbated by disappointing data from Germany, weighed on stock markets, but that hardly impacted gold, which is considered a safe store of value during times of political or economic uncertainty. Bullion has fallen about 12 percent from a peak in April as investors instead flocked to the dollar, with U.S.-China trade friction unfolding against a background of higher U.S. interest rates. "There is nothing that has set gold in motion in terms of being a haven investment or moving higher," said Jeff Klearman, portfolio manager at GraniteShares. The dollar has benefited over the past week from expectations for further U.S. interest rate hikes, as well as concerns over Italy's budget and ongoing Brexit talks. The U.S. central bank is expected to increase rates in December for a fourth time this year. Rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion. Among other precious metals, silver rose 0.4 percent to $14.04 per ounce, after earlier hitting $13.85 - its lowest since Jan. 21, 2016. "With so much silver around and lack of investment, nobody really cares about silver right now. There is so much above ground inventory that is causing silver prices to fall," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.

Palladium rose about 1.5 percent to $1,126.70 per ounce, while platinum was down 0.6 percent at $829.10 an

ounce.

(Reporting by Swati Verma, Karthika Suresh Namboothiri and Arpan Varghese in Bengaluru; editing by Chizu Nomiyama and G Crosse)