securing access to a folder - 404 error (no replies)

I'm trying to secure a directory on a CentOS 6.3 64 server running NGINX 1.2.7. I think I've set this up correctly, but it keeps giving me a 404 Not Found error when I try to access a file in that folder in the browser using domainName/secure/hello2.html.

I created an .htpasswd file using printf "MYUSER:$(openssl passwd -1 MYPASSWORD)\n" >> .htpasswd
and put that into the /var/www/protected/ folder.

I also modified the NGINX config file and included a location/auth block for the /secure/ folder:

# protect the "secure" folder ( /var/www/html/secure )
location ^~ /secure/ {
auth_basic "Restricted";
auth_basic_user_file /var/www/protected/.htpasswd;
}

If I comment out this block from the config file and restart NGINX, I can see the file in the browser with no problem. I even moved the .htpasswd file into the /secure/ folder and changed the config file to reflect that change (just to see what would happen), but I still get the 404 Not Found error.

Can anyone tell me what I'm missing?