* Trump and Xi agree on 90-day trade truce to negotiate
* Palladium hovers below record highs hit on Friday
* GRAPHIC-2018 asset returns: (Updates prices)By Swati VermaBENGALURU, Dec 3 (Reuters) - Gold climbed to its highest innearly a month on Monday as the dollar weakened after the UnitedStates and China agreed a temporary truce in their trade war.Spot gold was up 0.8 percent at $1,231.25 an ounce by1327 GMT, having touched its highest level since Nov. 7 at$1,232.22.U.S. gold futures gained 0.9 percent to $1,236.50."The appeal of U.S. dollar as a safe haven is softening andthat leads to a rising gold price," said Julius Baer analystCarsten Menke."This is very much as expected under the assumption thatthere was some sort of a positive development at the G20 meetingin terms of the trade tensions between the U.S. and China."Washington and Beijing agreed at the G20 summit in Argentinato halt additional tariffs, halting escalation in their tradewar as the two sides try to resolve their differences within 90days. This weighed on the dollar index , which measures thegreenback against a basket of six major currencies, making goldcheaper for holders of other currencies. "Bullion is likely to get a further boost if prices manageto stand firmly above $1,230 and particularly if they surpass$1,235," ActivTrades' chief analyst Carlo Alberto De Casa wrotein a note."In this case, there could be space for further rallies,with a first target at $1,260 and a more ambitious one at$1,300. A climb would become more likely if the U.S. FederalReserve reduces the number of rate hikes in 2019/20."Lower interest rates reduce the opportunity cost of holdingnon-yielding bullion and weigh on the dollar.The U.S. currency was the preferred safe haven this year asthe U.S.-China trade conflict unfolded against a backdrop ofhigher U.S. interest rates, denting gold's appeal.In the week to Nov. 27 speculators increased their net shortposition in gold by 8,464 contracts to 51,828 contracts, theU.S. Commodity Futures Trading Commission (CFTC) said on Friday. "The key point is still the very bearish positioning in thefutures market, which is partly due to the strong U.S. dollarand the outlook for further rising interest rates. Now that wehave a relief in that regard this could provide some more upsidefor gold in the short term," Julius Baer's Menke said.Among other precious metals, palladium gained 1.3percent to $1,193.50 an ounce after crossing the $1,200 mark forthe first time on Friday.Spot silver climbed 2.2 percent to $14.48 andplatinum rose 1.6 percent to $810.60. (Reporting by Swati Verma in BengaluruEditing by Ed Osmond, David Goodman and Kirsten Donovan)