Gold rebounds as dollar weakens, bond yields ease

Aug. 19 (Reuters) - Gold rebounded on Wednesday as the U.S. dollar weakened and global bond yields eased from multi-decade highs, while markets awaited minutes from the Fed's latest policy meeting for clues on its interest rate outlook amid persisting inflation risks.

Spot gold XAU= gained 0.8% to $4,370.02 per ounce by 1220 GMT, while U.S. gold futures GCcv1 edged 0.1% higher to $4,424.70.

Bullion declined about 2% on Tuesday after long-term borrowing costs from the United States to Germany and Japan rose to their highest levels in several decades on inflation concerns.

The dollar softened as the bond selloff slowed on Wednesday, improving the appeal of non-interest-bearing bullion.

"In the near term, bullion may struggle for a clear trajectory, pulled in competing directions as markets weigh lingering geopolitical friction against the Fed's evolving policy path," said Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com.

"But the macro backdrop is gradually improving for bullion as price pressures ease and the case for a Fed hold strengthens. Gold is well-positioned to extend its recovery past the $4,500 threshold and escape bear market territory."

Markets now await the minutes of the U.S. Federal Open Market Committee's July meeting, scheduled for release at 1800 GMT.

Traders are pricing in a 67% probability of a Fed hold in September, according to the CME FedWatch Tool. Bets for a hike have declined after a series of soft U.S. economic data.

Lower interest rates make gold more attractive, as the metal itself pays no yield or interest.