PRECIOUS-Gold falls 1% after hitting two-week high but stays above $1,550

(Updates prices)
* Risk assets dragged lower by Chinese virus anxiety
* Palladium off record high

By Harshith Aranya
Jan 21 (Reuters) - Gold shed 1% on Tuesday in volatile trade
as investors booked profits after prices hit a two-week high
early in the session, although losses were limited by a slide in
equities due to worries about a virus outbreak in China.
The precious metal pared losses and climbed back up above
the $1,550 level, buoyed by a low interest-rate environment and
lingering geopolitical tensions.
Spot gold XAU= was down 0.2% at $1,558.60 per ounce by
1:40 p.m. EST (1840 GMT), after hitting its highest level since
Jan. 8 at $1,568.35 in early trading.
U.S. gold futures GCv1 settled 0.2% lower at $1,557.90.
"We've had a fairly decent period of performance for gold
and we're giving back some of that," said Bart Melek, head of
commodity strategies at TD Securities, adding gold is likely to
hold in a fairly tight range around the $1,550 level for the
time being.
"I've not heard of any news that would suggest that this
(gold's decline) is some sort of a structural, permanent
fundamental set of developments. This is more of an adjustment
towards the downside due to technical reasons."
Safe-haven bullion drew some support as global stock markets
slid on mounting concern about a new strain of coronavirus in
China. MKTS/GLOB
Bullion is up more than 6% since Dec. 6. On Jan. 8, gold
pierced the $1,600 ceiling for the first time in nearly seven
years on escalating tensions between the United States and Iran.
"The bullish structure in gold has not changed yet. It has
to break below $1,450 to change that trend," said Michael
Matousek, head trader at U.S. Global Investors, adding gold will
be supported by the U.S. Federal Reserve keeping interest rates
steady and increased buying by central banks.
Focus is now likely to turn to the Fed as it meets for its
first policy meeting of the year on Jan. 28-29. Higher interest
rates lift the opportunity cost of holding non-yielding bullion.
Elsewhere, palladium XPD= fell 4% to $2,400.12, set to
mark its biggest daily percentage decline in a month. Prices had
scaled a fresh record peak of $2,582.19 on Monday.
"Palladium is taking a bit of a pause here as risk appetite
dries up," TD Securities' Melek said.
Silver XAG= fell 1.3% to $17.83, while platinum XPT=
dropped 1.1% to $1,004.17 per ounce.