* Dollar slips, gives up overnight gains
* U.S., Gulf allies discuss possible response to Saudi attack
* Bank of Japan leaves interest rates unchanged (Recasts, updates prices)
By Brijesh Patel
Sept 19 (Reuters) - Gold rose back above $1,500 a ounce on Thursday as the focus returned to global growth risks and Middle East tensions, helping bullion recover after the U.S. Federal Reserve cut interest rates but gave mixed signals on any future easing.
Spot gold was up 0.6% at $1,502.53 per ounce as of 1204 GMT, after falling on Wednesday to $1,484.16, a one-week low.
U.S. gold futures dipped 0.4% to $1,509.30 an ounce.
“We’ve repeatedly seen any dips below $1,500 or towards $1,490 meet buying interest as market participants see lower prices as a buying opportunity,” Commerzbank analyst Carsten Fritsch said.
“They still expect gold to trade higher in the medium term, because of a favourable environment of lower, negative interest rates, persistent political and economic risk and growing tensions in the Middle East.”
The Fed cut rates for the second time this year by a quarter percentage point as policymakers battle a slowdown in global growth, but the U.S. central bank signalled further cuts were unlikely as the labour market remained strong.
“The market is just digesting a hawkish rate cut from the FOMC (Federal Open Market Committee). The FOMC seems very split in terms of how aggressive they need to be cutting rates further and that has taken (off) some support from gold,” Saxo Bank commodity strategist Ole Hansen said.
“The short term could be a little bit challenging for gold. The market is stuck in the $1,512-$1,480 range and with a potential lack of bullish news, there is a risk we could see a deeper correction, but the overall bullish outlook for gold is still intact.”
Earlier in the day, the Bank of Japan kept monetary policy steady as expected.
However, central banks around the world face increasing pressure to dole out monetary support as the U.S.-China trade war hurts global growth.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.
Meanwhile, the dollar slipped, giving up overnight gains.
“The fact that gold is not trading lower after a less dovish Fed is a testament to gold’s resilient demand as an alternative asset,” AxiTrader strategist Stephen Innes said in a note.
On the geopolitical front, the United States was discussing with Saudi Arabia and other Gulf allies possible responses to an attack on Saudi oil facilities.
Silver gained 0.7% to $17.87 an ounce, while platinum rose 0.4% $933.66. Palladium edged 0.1% higher to $1,593.10. (Reporting by Brijesh Patel in Bengaluru; Editing by Dale Hudson and David Evans)