(Updates prices, adds analyst comment)By Renita D. YoungNEW YORK, Sept 13 (Reuters) - Gold prices slid on Thursdayas investors purchased riskier assets instead of seeking a safehaven in gold, amid hopes for a new round of U.S.-China tradetalks.Spot gold declined 0.3 percent to $1,202.30 per ounceby 1:34 p.m. EDT (1734 GMT), after earlier hitting its highestlevel since Aug. 28 at $1,212.49. Bullion gained 0.7 percent inthe previous session in its biggest single-day rise since Aug.24."Gold pared gains as China became a focus point once again,"said George Gero, managing director of RBC Wealth Management.U.S. gold futures for December delivery settled down$2.70, or 0.2 percent, at $1,208.20 per ounce.
"It's a break of the correlation today between the dollarand gold. Even though the dollar is down, we're not seeing thatequate to higher prices in precious metals," said Chris Gaffney,president of world markets at TIAA Bank. "It just seems like thesentiment for the meals is very negative."The dollar index declined against a basket of majorcurrencies after data showed U.S. consumer prices increased lessthan expected in August, paring traders' outlook that domesticinflation is accelerating.A weaker dollar typically makes dollar-priced gold lessexpensive for holders of other currencies, but the correlationbroke on Thursday. The CPI data came after soft U.S. wholesale price dataundermined the case for a faster pace of policy tightening bythe Fed. The U.S. central bank is widely expected to raisebenchmark interest rates at its September meeting.
Higher rates make gold less attractive since it does not payinterest and costs to store and insure.In trade talks, senior U.S. officials sent an invitation totheir Chinese counterparts to hold another bilateral trademeeting, raising speculation about a subtle shift inWashington's policy. The months-long trade rift between Washington and Beijinghas prompted investors to buy the U.S. dollar in the belief thatthe United States has less to lose from the dispute. This hasdriven investors toward record short positions in Comex gold andheavy liquidations in gold exchange-traded funds. But on Thursday, possible progress in the trade riftpressured the U.S. dollar, traders said.Gold prices have fallen nearly 12 percent since a peak inApril amid intensifying global trade tensions and under pressurefrom rising U.S. interest rates.Meanwhile, spot silver was flat at $14.21 per ounce,earlier touching $14.34, a nine-day high. Platinum increased 0.3 percent to $800.74, after touching a one-monthhigh of $812.30. Palladium gained 0.9 percent to $983.50per ounce. (Reporting by Renita D. Young in New Yorkadditional reporting by Nallur Sethuraman and Vijaykumar Vedalain BengaluruEditing by Will Dunham and Matthew Lewis)
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