PRECIOUS-Gold steadies as trade optimism dims on Huawei sanctions

* Spot gold expected to test resistance at $1,307/oz-
technicals
* SPDR gold holdings fall to near Oct. 9 levels

(Updates prices)
By Arijit Bose
May 16 (Reuters) - Gold steadied on Thursday, consolidating
in a tight range below the key $1,300 pivot, as Washington
slapped sanctions on Chinese telecoms giant Huawei, souring
optimism for a thaw in U.S-China trade tensions.
Spot gold XAU= was nearly unchanged at $1,298.12 per ounce
at 0739 GMT, moving in a narrow range of about $4.
U.S. gold futures GCv1 were also steady at $1,298.10 an
ounce.
"There are still a lot of underlying tensions (surrounding
U.S.-China trade relations) so that might be supportive for
gold," said John Sharma, economist at National Australia Bank.
While gold's gains may be limited by expectations of talks
between the U.S. and China, the metal would still hover in the
$1,280-$1,310 range, Sharma added.
Asian equities slipped after the United States hit Huawei
with severe sanctions, threatening to further strain trade ties,
and erasing limited gains triggered by news that U.S. President
Donald Trump planned to delay implementing tariffs on auto
imports. MKTS/GLOB The news on the sanctions dented hopes of a lull in the
escalating trade spat, which has roiled wider markets and
brought back to the fore risks of a slowdown in global growth,
exacerbated by recent weak economic data from China.
It also came soon after U.S. Treasury Secretary Steven
Mnuchin said he will likely travel to Beijing to continue
negotiations with Chinese counterparts. Escalations in trade tensions or economic uncertainty would
make a case for gold, which is considered a safe-haven asset.
However, "gold seems to have reached a temporary detente at
these levels with momentum weak to push it either way. The
geopolitical premium appears to be baked into the price for
now," Jeffrey Halley, senior market analyst, Asia Pacific at
OANDA said in a note.
On the technical front, spot gold is expected to test a
resistance at $1,307, a break above which could lead to a gain
to $1,322, according to Reuters technical analyst Wang Tao.

Meanwhile, SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, said its holdings fell 0.4% to
733.23 tonnes on Wednesday. Holdings are now around its lowest
levels since Oct. 9. GOL/ETF
Among other metals, silver XAG= edged 0.1% higher to
$14.81 an ounce, while palladium XPD= held steady at $1,344.25
an ounce.
Platinum XPT= gained 0.5% to $849.47, having touched a
seven-week trough at $837.75 in the previous session.