PRECIOUS-Gold dips slightly on profit booking, U.S.-China trade optimism

* Possible Fed rate cut still supporting gold
* Palladium trading near six-week high
* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl

(Adds analyst comments, updates prices)
By Karthika Suresh Namboothiri
June 11 (Reuters) - Gold prices dipped slightly on Tuesday
as investors booked profits following robust gains over the past
weeks, while rising hopes of a trade deal between China and the
United States lifted equities.
However, increasing expectations the U.S. Federal Reserve
would proceed with an interest rate cut this year pressured the
dollar, supporting bullion rates.
Spot gold XAU= dipped slightly to $1,327.41 per ounce as
of 1:33 p.m. EDT (1733 GMT). Prices had hit a 14-month high of
$1,348.08 on June 7.
U.S. gold futures GCcv1 settled 0.1% higher at $1,328.50
per ounce.
With fears easing that the United States would impose trade
tariffs with Mexico, investors are now optimistic that U.S.
President Donald Trump could shelve threats to impose more
tariffs on China as well. He is expected to meet with President
Xi Jingping at a Group of 20 summit on June 28-29. MKTS/GLOB
"People think there is going to be a sort-of resolution at
the end of this month with tariffs when President Trump meets
with Xi," said Michael Matousek, head trader at U.S. Global
Investors, adding that strong gains last week prompted some
profit booking.
The trade dispute between Beijing and Washington has toppled
markets since its inception more than a year ago and raised
concerns of a global economic slowdown, prompting central banks
around the world to keep a hold on interest rates.
"The rhetoric around Fed rates cut is weakening the dollar,
which will help drive gold," Matousek said. Lower interest rates
reduce the opportunity cost of holding nonyielding bullion and
weigh on the dollar.
Investors now see the U.S. Federal Reserve cutting rates as
well, with Fed fund futures now pricing in more than two
25-basis point rate cuts by year-end.
Markets await consumer price index data on Wednesday,
closely watched by the Fed as an inflation indicator, and Retail
sales on Friday for indication on whether tariffs are slowing
the economy.
"Stronger equity markets has drawn money away from gold,"
said Rob Lutts, chief investment officer at Cabot Wealth
Management. "I don't think it (gold prices) has the fundamentals
to move much higher. It has exhausted its run right here."
Other precious metals did not resonate with bullion's move,
with silver XAG= up 0.6% at $14.75 per ounce and platinum
XPT= gaining nearly 1% to $809.50 per ounce.
Among other precious metals, palladium XPD= extended gains
for a fourth straight session, climbing 0.9% to a six-week high
at $1,395.01 per ounce.

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