Gold gains as dollar stalls on U.S.-China trade talks

By Swati Verma

(Reuters) - Gold rose on Tuesday, supported by a slight pause in the dollar's rally as the United States and China continue talks aimed at ending their trade conflict.

Spot gold was up 0.4 percent at $1,313.81 an ounce at 1307 GMT after falling 0.4 percent in the previous session.

U.S. gold futures gained 0.4 percent to $1,317.50.

"The sentiment this morning is a little more constructive towards the deal," said ING analyst Warren Patterson.

"The (gold) price direction really hinges on how these trade talks play out. A positive outcome at trade talks could weigh on the dollar and that is constructive for gold prices."

The dollar steadied after climbing to its highest level since mid-December, having been the preferred refuge for investors concerned about the trade row.

U.S. Trade Representative Robert Lighthizer arrived in Beijing on Tuesday ahead of high-level trade talks to hammer out a deal ahead of a March 1 deadline.

Also on investors' radar is a long-drawn logjam in Washington over funding for a border wall with Mexico, as well as the continuing uncertainties surrounding Britain's planned departure from the European Union.

U.S. congressional negotiators on Monday reached a tentative deal to try to avert another partial government shutdown on Saturday.

Investors are worried about the economic impact of a U.S. government shutdown when global growth is already lean.

"Trade and geopolitical risks remain to underpin (gold) price action and we expect this to continue over the near-medium term, with supportive price interest remaining broadly toward $1,300 - $1,310," MKS PAMP Group said in a note.

For the near term, gold is expected to stay above $1,300, which is seen as a critical support level in charts followed by technical traders, analysts said.

"If we now see short-term resistance break around $1,315, then this could lead to further technical follow-up buying pressure towards - and possibly beyond - January's high of $1,326," said Forex.com analyst Fawad Razaqzada.

Among other metals, palladium was 0.6 percent higher at $1,394 an ounce, while silver gained 0.5 percent to $15.78.

Platinum firmed 0.2 percent to $783.31 an ounce, having touched its lowest since Jan. 2 at $779.50 in the previous session.

(Reporting by Swati Verma in Bengaluru; Editing by David Goodman and Louise Heavens)