* Palladium hits fresh high of $1,491/oz
* Spot gold may test resistance at $1,331/oz- technicals
* New round of U.S.-Sino talks to take place later in session
By Karthika Suresh Namboothiri
Feb 19 (Reuters) - Gold prices hovered near 10-month highs on
Tuesday as optimism around U.S.-China trade discussions dimmed the
dollar's appeal, while palladium struck a record high on supply concerns.
Spot gold was little changed at $1,326.48 per ounce as of 0814
GMT. The metal had touched $1,327.64 an ounce in the previous session,
its highest since April 25.
U.S. gold futures rose 0.5 percent to $1,329 an ounce.
A new round of talks between Beijing and the United States to
resolve their trade spat will take place in Washington later in the
day, with follow-up sessions at a higher level in the course of the
"If there is progress in trade talks there will be increasing
appetite for emerging-market currencies, and the U.S. dollar will
weaken," Argonaut Securities analyst Helen Lau said, adding that
the dollar will lose its safe-haven appeal, which will be supportive
U.S. President Donald Trump had said last week he might extend the
March 1 deadline for a deal and keep tariffs on Chinese goods from
The dollar index against its peers was a shade weaker at
96.881. U.S. financial markets were closed on Monday for Presidents'
Also supporting gold prices is the U.S. Federal Reserve's dovish
approach to monetary policy tightening, which reduces the cost of
holding gold, said John Sharma, an economist with National Australia Bank.
Minutes of the Fed's last policy meeting are due on Wednesday and
should provide more guidance on the likelihood of rate increases this year.
Gold prices have gained 3.3 percent so far this year on
expectations the Fed will pause its cycle of interest rate hikes and
on hopes the world's two largest economies will hammer out a trade deal.
Spot gold may test a resistance at $1,331 per ounce, a break above
which could lead to a gain to the next resistance at $1,343, according
to Reuters market analyst Wang Tao.
"Gold prices have inched up and consolidated above $1,325.
Softer economic prospects are likely to put some pressure on
interest-bearing assets," said Benjamin Lu, an analyst with
Singapore-based Phillip Futures.
Among other precious metals, palladium rose to a fresh peak of
$1,491 an ounce. The metal has surged almost 17 percent so far this year.
A supply deficit in the market has boosted demand for the
autocatalyst metal in the backdrop of stricter emissions standards.
Silver was little changed at $15.80 per ounce while platinum
inched 0.3 percent higher to $804, after touching $807.5 earlier in
the session, its highest since Feb. 6.
(Additional reporting by Asha Sistla in Bengaluru; Editing by
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