PRECIOUS-Gold edges higher after steep fall; robust dollar dents appeal

* Spot gold could fall to $1,488/oz -technicals
* SPDR Gold holdings rose 1.8% on Wednesday
* Stocks climb as China revives trade deal optimism

(Updates prices)
By Brijesh Patel
Sept 26 (Reuters) - Gold edged higher on Thursday as
investors bought into the market after a sharp fall in the
previous session, though bullion's gains were limited by a firm
U.S. dollar.
Spot gold XAU= rose 0.4% to $1,509.18 an ounce by 1315
GMT. U.S. gold futures GCcv1 were up 0.2% at $1,514.60.
Gold prices slipped as much as 2% on Wednesday as U.S.
political uncertainties stemming from an impeachment inquiry
into President Donald Trump drove investors to the safety of the
dollar.
The dollar index .DXY climbed to a three-week peak and was
hovering within striking distance of a two-year high of 99.370
hit this month. USD/
"People still see the dollar as the prime destination for
safety, so essentially the dollar has taken some of gold's
safe-haven flows," said FXTM analyst Lukman Otunuga who added
that the $1,500 level for gold could act as a support.
European shares gained ground after encouraging comments
from China about international trade. MKTS/GLOB
The Chinese commerce ministry said Beijing is in close
communication with Washington and preparing to make progress at
trade talks in October. Bullion has risen more than 17% this year, propelled by
trade tensions and an increasingly dovish monetary policy shift
by central banks because of fears over slowing growth.
"Geopolitical developments are still supportive to the
precious (complex), however it looks as though fast money
over-extended the recent rally," MKS PAMP said in a note.
"The move lower has seen participants take advantage of the
lower entry point as the metal still holds the uptrend, while
ETFs (exchange-traded funds) continue to see inflows."
Holdings of SPDR Gold Trust GLD , the world's largest
gold-backed ETF, jumped to 924.94 tonnes on Wednesday, up 1.8%
from the previous day. GOL/ETF
Investors were also watching for developments in the
Democrats' decision to begin an impeachment inquiry into Trump
after a summary of a telephone call showed the U.S. president
had asked Ukraine's president to investigate a political rival.
On the technical side, spot gold is likely to fall to $1,488
an ounce after breaking support at $1,514, said Reuters
technical analyst Wang Tao. Elsewhere, silver XGA= rose 0.2% to $17.93 an ounce,
platinum XPT= was up nearly 1% at $934.30 and palladium XPD=
climbed 1.2% to $1,661.39.

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