Gold prices fall in thin trade as risk aversion recedes

By Karthika Suresh Namboothiri

(Reuters) - Gold prices slipped on Monday as risk aversion waned amid some signs of progress in U.S.-China trade talks, while a firm dollar kept bullion under pressure.

Spot gold was down 0.4 percent at $1,313.01 per ounce by 0552 GMT, having hit its highest level since April 26 at $1,326.30 on Thursday.

U.S. gold futures fell 0.4 percent to $1,317.3 per ounce.

"The plunge (from Thursday's peak) came along with fading enthusiasm for safe-havens, as U.S. and China are moving to close a deal and many uncertainties surrounding the U.S. government shutdown, Brexit, Fed policy were cleared last week," said Margaret Yang, a market analyst with CMC Markets.

The U.S.-China trade talks had a "good vibe" with much work remaining, White House economic adviser Larry Kudlow said on Friday, fanning hopes of an end to the long-drawn trade tiff between the world's two largest economies.

Meanwhile, the dollar was near a one-week high against the yen on the back of robust U.S. jobs data.

"Upbeat non-farm payroll suggests the U.S. economy is riding a strong momentum, dampening demand for safe-haven assets like gold," Yang said, adding that this failed to change the market's view of the Federal Reserve's dovish stance with regard to its monetary tightening policy.

Despite signs of a robust economy, the Fed is widely expected to keep rates steady this year, thanks to heightened worries over global growth, especially in China and Europe.

"Investors are now focused on trade talks and what emerges out of those," said ANZ analyst Daniel Hynes. "Any follow up data that does indicate continued positive economic growth will potentially indicate to people how the Fed will move in the shorter term."

Gold trade was subdued with top consumer China closed all week for the Lunar New Year.

Spot gold may test a support at $1,311 per ounce, a break below which could cause a loss to the next support at $1,299, according to Reuters analyst Wang Tao.

"I think gold will revisit the band of short-term support at $1,306-$1,310 but remains fairly well supported," said Nicholas Frappell, global general manager, ABC Bullion.

Among other precious metals, palladium was little changed at $1,350.00 per ounce.

Silver and platinum dipped 0.6 percent each to $15.81 per ounce and $817 per ounce respectively.

(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Subhranshu Sahu and Richard Pullin)