PRECIOUS-Gold set for biggest weekly drop in 3 years on trade optimism

(Adds comments, updates prices)
* Holdings in SPDR Gold fell 0.16% on Thursday
* Gold hits lowest level since Aug. 5 at $1,455.80/oz
* Silver set for steepest weekly fall since October 2016

By Eileen Soreng
Nov 8 (Reuters) - Gold prices fell on Friday and were on
track for their biggest weekly decline in almost 3 years as a
stronger dollar weighed, while optimism around U.S.-China trade
talks dented bullion's safe-haven appeal.
Spot gold XAU= was down 0.6% at $1,458.52 per ounce at
1309 GMT, poised for its biggest weekly drop - about 3.7% -
since November 2016. Prices earlier fell to their lowest since
Aug. 5 at $1,455.80.
U.S. gold futures GCcv1 fell 0.5% to $1,459.70.
"There's expectation for resolution of the trade war and
that is the main story behind this fall in gold," said Carlo
Alberto De Casa, chief analyst at ActivTrades.
A risk-on scenario, stronger dollar and Thursday's breakdown
of the key support level of $1,480 also weighed on bullion as
many traders were looking at gold in a $1,480-$1,520 trading
range, De Casa said.
Gold fell below its 100-day moving average for the first
time since end-May on Thursday.
The dollar index .DXY was headed for a weekly gain as it
benefited from news that China and the United States had agreed
to roll back tariffs as part of a potential preliminary pact to
end their trade war. USD/ Meanwhile, uncertainty about the fate of trade talks nudged
world stock markets off 21-month highs on Friday after what has
proved to be a stellar week for risk assets. MKTS/GLOB
An agreement between the two giant economies to roll back
existing tariffs as part of a 'phase one' trade deal faces
fierce internal opposition at the White House and from outside
advisers, sources familiar with the talks told Reuters.
"We are trading on a lot of speculation right now and
there's no solid evidence or anything specific," said Craig
Erlam, OANDA senior market analyst, adding gold could move back
to $1,440 if a 'phase 1' trade deal were signed next month.
Reflecting sentiment, holdings in the world's largest
gold-backed exchange-traded fund, SPDR Gold Trust GLD , dipped
0.16% to 914.38 tonnes on Thursday. "While subdued global economic growth and low interest rates
should keep gold prices elevated, positive developments for gold
have now largely played out," analysts at Capital Economics said
in a note.
Elsewhere, silver XAG= dropped 1.9% to $16.78 per ounce,
and was set to fall more than 7% for the week, its steepest drop
since October 2016.
Platinum XPT= fell 1.8% to $892.32 per ounce, poised for a
5.6% drop for the week.
Palladium XPD= lost 1.3% to $1,777.67 and was headed for a
weekly decline after rising for four weeks.