PRECIOUS-Gold eases as U.S.-China trade talks advance, Fed meeting looms

* Traders see 90.9% chance for a 25 bps U.S. rate cut this
week
* Gold, silver specs raise bullish positions in week to Oct.
22
* Palladium reaches another record high at $1,789.43/oz

(Updates prices)
By Sumita Layek
Oct 28 (Reuters) - Gold eased on Monday after jumping 1% in
the previous session as progress in U.S.-China trade talks
limited further gains, and as caution set in ahead of this
week's U.S. Federal Reserve meeting.
Palladium meanwhile continued a record run linked to supply
shortages to hit another all-time high.
Spot gold XAU= was down 0.1% at $1,503.52 per ounce as of
1213 GMT, while U.S. gold futures GCv1 were 0.1% higher at
$1,506.80 per ounce.
Traders are watching for further clues on the outlook for
monetary policy at the Fed's Oct. 29-30 meeting, at which the
U.S. central bank is widely expected to agree to cut its
benchmark interest rates for the third time this year.
According to CME Group's FedWatch tool, there is a 90.9%
chance for a 25 basis point rate cut. FEDWATCH
While projections for further cuts are providing some
support to gold, there is "definitely some caution" in the
market, Saxo Bank commodity strategist Ole Hansen said.
"The fact that we're seeing volatility being sent lower,
stock markets at near record highs especially in United States -
that's reducing the need for gold, at least in the near term,"
he said.
A retreat in European shares on Monday after five straight
days of gains and a drip in the dollar index from a one-week
high helped hold bullion steady. .EU USD/
U.S. and Chinese officials are "close to finalising" some
parts of a trade agreement after high-level telephone
discussions on Friday, the U.S. Trade Representative's office
and China's Commerce Ministry said. U.S. President Donald Trump last week said Washington was
doing well in its trade negotiations with China and that China
wants to make a deal "very badly". "Gold remains supported by an expected Fed rate cut, but
gains could be limited by ongoing trade talks and a probable EU
27 extension which quashes the no-deal Brexit risk," AxiTrader
market strategist Stephen Innes said in a note.
European Council President Donald Tusk said that the 27
countries that will remain in the European Union after Britain
leaves agreed on Monday to accept London's request for a Brexit
extension until January 31, 2020.
Hedge funds and money managers raised their bullish
positions in COMEX gold and silver contracts in the week to Oct.
22, data showed on Friday. CFTC/
Among other precious metals, palladium XPD= rose 1.3% to
$1,786.39 per ounce, having earlier hit a record high of
$1,789.43.
The metal, used in vehicle exhaust systems to reduce harmful
emissions, has climbed about 41% so far this year on a sustained
supply crunch.
Silver XAG= was flat at $18.01 per ounce, while platinum
XPT= was up 0.4% at $929.57 per ounce.