PRECIOUS-Gold gains 1% propped up by U.S. interest rate cut, trade talk woes

* Spot gold hits highest since Oct. 25 at $1514.20/oz
* Dollar falls to its lowest since Oct. 21
* GRAPHIC -2019 asset returns: http://tmsnrt.rs/2jvdmXl

(Updates prices)
By Eileen Soreng
Oct 31 (Reuters) - Gold prices jumped over 1% on Thursday
supported by an interest rate cut by the U.S. Federal Reserve
and as uncertainty surrounding a U.S.-China trade deal bolstered
the metal's safe-haven appeal.
Spot gold XAU= was 1.2% higher at $1,512.81 an ounce as of
5:17 p.m. ET, having earlier risen to a near one-week high of
$1514.20. Prices were set for a monthly gain of more than 2%.
U.S. gold futures GCv1 settled up 1.2% at $1,514.8.
"The Fed lowered rates and that's inflationary so people
think lower rates should create inflation and that's a trigger
for gold," said Michael Matousek, head trader at U.S. Global
Investors.
The U.S. central bank on Wednesday cut interest rates for
the third time this year to help sustain U.S. growth despite a
slowdown in other parts of the world, but signalled there would
be no further reductions unless the economy takes a turn for the
worse. The dollar fell to a 10-day low against a basket of major
currencies as investors evaluated whether the Fed would continue
to cut rates. USD/
Gold is highly sensitive to any reduction in interest rates,
which decreases the opportunity cost of holding non-yielding
bullion. Rate cuts also weigh on the dollar, in which gold is
priced.
Gold is on an uptrend and if it goes above the $1,535 level
it would be the next leg in the bull market in gold, Matousek
said.
Uncertainties on the trade front also supported bullion,
with the cancellation of an Asia-Pacific economic cooperation
summit in Chile next month, at which U.S. and China were
expected to sign an interim deal to ease hostilities in their
long-running trade war.
"A 'Phase One' deal is expected to have only a limited
positive outcome for the US economy," UBS strategist Joni Teves
said in a note, adding "it is premature to expect a more
substantial deal."
Also, Bloomberg earlier reported that Chinese officials have
doubts about whether it is possible to reach a comprehensive
long-term trade deal with Washington and U.S. President Donald
Trump. Meanwhile, U.S. weekly jobless claims showed the number of
Americans filing applications for unemployment benefits rose
slightly more than expected last week, adding to gold's gains. Elsewhere, palladium XPD= was down 0.5% at $1,797.06 an
ounce, having hit a record high of $1,824.50 on Wednesday. The
autocatalyst metal was set for a third straight monthly gain, up
7% in October.
Silver XAG= rose 1.4% to $18.12 an ounce while platinum
XPT= rose by 0.7% to $932.26, with both metals set for monthly
gains.