* Gold up for third session
* Palladium hits all-time high of $1,449 an ounce
* Gold could retest upside of $1,326 an ounce - analyst
* SPDR Gold holdings fall to lowest in 2019
By Karthika Suresh Namboothiri
Feb 18 (Reuters) - Gold prices rose to their strongest level in
more than two weeks on Monday as the dollar weakened on hopes the
United States and China are nearing a trade deal, while palladium hit
a record high.
Spot gold had gained 0.1 percent to $1,322.41 per ounce as of
0747 GMT. The metal touched $1,325.30 earlier, just below a 9-month
peak of $1,326.30 an ounce marked on Jan. 31.
U.S. gold futures rose 0.3 percent to $1,326.1 an ounce.
"Alleviation of risks around the trade talks has certainly
benefited the markets," said ANZ analyst Daniel Hynes, adding
that signs of progress in the discussions had reduced appetite for the
dollar, which has been supporting gold.
The dollar was marginally weaker on Monday, as increasing
expectations of a U.S.-Sino trade deal led investors to shift away
from the safety of the greenback, which had been the preferred
safe-haven during the trade dispute.
The United States and China will resume trade talks this week in
Washington with time running short to ease their bruising trade war,
but U.S. President Donald Trump repeated on Friday that he may extend
a March 1 deadline for a deal and keep tariffs on Chinese goods from
Spot gold prices have risen about 3.3 percent so far this year on
hopes that the world's two largest economies will hammer out a truce
and on expectations the U.S. Federal Reserve will pause its cycle of
interest rate hikes.
Minutes of the Fed's January policy meeting are due on Wednesday
and should provide more guidance on the likelihood or not for rate
hikes this year.
"Looser monetary policies are generally favourable to gold,
which has benefited since the Fed paused its tightening path,"
said Nicholas Frappell, global general manager, ABC Bullion.
"The market will be looking closely at U.S. and China data
and I think gold will target a retest of the $1,326 level again."
However, holdings of SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, fell to its lowest level this year
at 793.03 tonnes on Friday.
Meanwhile, palladium hit a record high of $1,449 an ounce and
stayed in a broad $20 range in early trade. The metal was currently
trading at $1,442 an ounce, up 0.7 percent.
"In combination with supply-side issues, the (palladium)
market is going to be in a sizeable deficit this year ... potential
for better-than-expected demand from China will exacerbate that
tightness," ANZ's Hynes added.
Platinum inched 0.2 percent higher to $803.18 per ounce, having
touched a near two-week high of $807 earlier in the session. Silver
was little changed at $15.78.
(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by
Joseph Radford, Shreejay Sinha and Rashmi Aich)
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