PRECIOUS-Gold at 2-week highs; trade talk hopes whet risk-appetite

Feb 18 (Reuters) – Gold prices stood firm at two-week highs on Monday as the dollar inched lower, while equities rose on increased expectations of a U.S.-China trade deal, capping bullion’s gains.

FUNDAMENTALS

* Spot gold inched 0.1 percent higher to $1,321.69 per ounce at 0037 GMT. The metal hit a near 9-month high of $1,326.3 an ounce on Jan. 31

* U.S. gold futures rose 0.2 percent to $1,324.9 an ounce.

* The dollar index, a gauge of its value versus six major peers was steady at 96.91.

* The United States and China will resume trade talks this week in Washington with time running short to ease their bruising trade war, but U.S. President Donald Trump repeated on Friday that he may extend a March 1 deadline for a deal and keep tariffs on Chinese goods from rising.

* Chinese state news agency Xinhua said on Friday that the world’s two largest economies had reached a “consensus in principle” on some key issues, adding they had a detailed discussion on a memorandum of understanding on trade and economic issues. It gave no details.

* Meanwhile, Trump on Friday declared a national emergency in a bid to fund his promised wall at the U.S.-Mexico border without congressional approval, an action Democrats vowed to challenge as a violation of the U.S. Constitution.

* California will “imminently” challenge President Donald Trump’s declaration of a national emergency to obtain funds for a U.S.-Mexico border wall, state Attorney General Xavier Becerra said on Sunday.

* Britain’s Theresa May plans to speak to every European Union leader and the European Commission chief to seek changes to her EU withdrawal agreement, days after another defeat from her own lawmakers and as businesses brace for a no-deal Brexit on March 29.

* A rally in domestic prices curtailed physical gold demand in India and Japan last week, with interest in the precious metal lacklustre in other Asian centres as markets gradually return from the Lunar New Year holidays.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.48 percent to 793.03 tonnes on Friday from 796.85 tonnes on Thursday.

* Spot palladium prices surged on Friday to match an all-time high of $1,434.50, touched on Jan. 17, buoyed by expectations of a widening market deficit this year.

* In Zimbabwe, rescuers pulled the bodies of at least 22 illegal gold miners out of shafts west of Harare that were flooded earlier in the week, and rescued eight more alive, officials and witnesses said on Saturday. (Reporting by Karthika Suresh Namboothiri in Bengaluru; editing by Richard Pullin)