Gold pares gains on U.S.-China trade war optimism

(Reuters) - Gold prices pared gains on Tuesday after U.S. President Donald Trump confirmed he would meet with Chinese President Xi Jinping at an international summit, fanning hopes for a quick end to the U.S.-China trade dispute.

Earlier in the session, gold prices had briefly surged to 1% after central banks in Europe and the United States hinted at monetary easing.

Spot gold gained 0.5% to $1,345.70 per ounce as of 1:32 p.m. EDT (1732 GMT). Prices had risen to $1,354.20 earlier, before Trump said in a tweet he had a "very good telephone conversation" with China's Xi.

The two leaders will meet at the G20 meet later this month in Japan, where the discussions will focus on trade in the midst of a bitter tariff spat, that has upset global markets since its conception a year ago.

U.S. gold futures settled 0.6% higher at $1,350.7 per ounce.

"We are seeing a bit of a resurgent in risk appetites," said Bart Melek, head of commodity strategies at TD Securities in Toronto, adding that equities have moved higher, which has helped the dollar.

"Commodities on the risk side have gone up and gold has traded lower, on the back of the agreement between the U.S. and China on the trade side."

Equity markets rallied following Trump's comments while the dollar index held tight at two-week highs.

European Central Bank President Mario Draghi said the bank would need to ease policy again with tepid inflation, while markets expect the U.S. Federal Reserve to cut interest rates later this year.

"Traders are looking at an immediate future for easing money from central banks, which should see gold trading higher for the time being," said Bob Haberkorn, senior market strategist at RJO Futures.

Spot gold may break a support at $1,337 per ounce and fall to the next support at $1,324, according to Reuters technical analyst Wang Tao.

"As long as gold holds the $1,333 level intraday, it is good for bullion," said Michael Matousek, head trader at U.S. Global Investors. "Prices ran up after expectations from central banks, but there has been no definitive answers to retain those levels on an intraday basis."

Other precious metals rose as well, with silver gaining 1.1% to $15 per ounce and platinum up 1.4% at $802.75.

Palladium rose 2.2% to $1,481.51 per ounce, after hitting $1,489.03 the session, its highest level since March 27.

(Reporting by Karthika Suresh Namboothiri and Diptendu Lahiri in Bengaluru; Editing by Marguerita Choy and Richard Chang)