PRECIOUS-Gold falls as hopes of U.S.-China trade truce boost riskier assets

* SPDR Gold holdings fell 0.2% on Wednesday
* Gold up 7.6% so far this month despite Wednesday's fall
* Markets cut bets for half-point Fed rate cut in July

(Adds quote, updates prices)
By Sethuraman N R
June 27 (Reuters) - Gold prices fell on Thursday as hopes of
a truce in the U.S.-China trade spat ahead of a weekend meeting
at the G20 summit rekindled investors' interest in riskier
assets, weighing on safe-haven bullion.
The South China Morning Post, citing sources, said
Washington and Beijing were laying out an agreement that would
help avert the next round of tariffs on an additional $300
billion of Chinese imports. Spot gold XAU= was down 0.3% at $1,404.85 per ounce by
1203 GMT, after shedding more than 1% in the previous session.
U.S. gold futures GCv1 fell 0.5% to $1,408.70 an ounce.
"The news that U.S. and China have agreed to a trade truce
should help the risk sentiment in the market and growth outlook.
That should weigh on the gold prices," SP Angel analyst Sergey
Raevskiy said.
On Wednesday, U.S. President Donald Trump said a trade deal
with his Chinese counterpart Xi Jinping was possible this
weekend, though he was prepared to impose tariffs on virtually
all remaining Chinese imports if talks fail. The next move in gold could depend on how tensions between
the United States and Iran pan out and the weekend G20 meeting,
Raevskiy said, adding prices could go all the way back to $1,300
if there were positive developments on both fronts.
Gold has fallen more than $35 since touching a more than
six-year peak on Tuesday, especially after officials from the
U.S. Federal Reserve signalled they would not resort to a big
interest rate cut in July. However, gold prices are still up 7.6% so far this month,
with prices gaining nearly $70 since last week alone on hopes
there will be at least a quarter percentage point reduction in
July by the Fed. "Gold was heavily overbought after this run towards $1,450
and a correction has ensued," said Rhona O'Connell, an analyst
with INTL FCStone.
"The rally does not imply panic in other financial sectors,
but that the markets are taking notice of potential economic,
financial and political risks and the fact that gold enhances
risk-adjusted returns."
Meanwhile, holdings of SPDR Gold Trust GLD , the world's
largest gold-backed exchange-traded fund, fell 0.22% to 797.85
tonnes on Wednesday. Still, the holdings have risen 7.4% so far
this month. GOL/ETF
Among other precious metals, silver XAG= fell 0.2% to
$15.21 per ounce and platinum XPT= rose 0.2% to $815.79
Palladium XPD= rose 0.2% to $1,526 an ounce.