PRECIOUS-Gold prices ease as dollar recovers from lows

* Spot gold may fail to break resistance at $1,219 -
    * Dollar index recovers from over 7-week lows hit in prior
    * Palladium falls after rising to most since May 2015

 (Updates prices, recasts, adds quote)
    By Arpan Varghese
    Jan 24 (Reuters) - Gold prices eased as the dollar recovered
from seven-week lows on Tuesday, sliding after the yellow metal
hit two-month highs earlier in the session amid signs that U.S.
President Donald Trump would adopt a protectionist stance on
    Trump formally withdrew the United States from the
Trans-Pacific Partnership trade deal on Monday and told U.S.
manufacturing executives he would impose a hefty border tax on
firms that import products after moving American factories
    Spot gold slid 0.3 percent to $1,214.2 per ounce by
0649 GMT, after hitting its strongest since Nov. 22 at $1,219.59
earlier in the session. 
    U.S. gold futures remained steady at $1,214.20.
    "For the time being, we suspect that gold will likely push
higher, as improving chart patterns, unease about Trump's
policies, growing perceptions that the Fed will be relatively
quiet for a while and pressure on the dollar, all provide an
element of support," INTL FCStone analyst Edward Meir said.
    The dollar index, which measures the greenback
against a basket of currencies, inched up 0.1 percent at
100.210. In the previous session, it hit a more than 7 week low
of 99.899.
    "We are looking at gold hitting $1,250 within weeks. The
rationale is very simple. The market was in honeymoon with
Trump. With him in power now, the reality starts to bite," said
Dominic Schnider of UBS Wealth Management in Hong Kong.
    Trump's campaign calls for tax cuts and more infrastructure
spending have boosted U.S. shares and the dollar, as well as
driving a selloff in U.S. Treasury bills, but his protectionist
statements and a flurry of off-the-cuff tweets have kept many
investors from adding to risky positions.
    "Regardless of Trump, the main story for gold is negative
interest rates in the U.S. We are not expecting the Fed to raise
rates in March and it's just going to be two hikes and that's
roughly priced in to the market," Schnider said.
    Spot gold looks exhausted and may again fail to break a
strong resistance at $1,219 per ounce before retracing towards a
support at $1,196, according to Reuters technical analyst Wang
    Volumes and buying demand on the Shanghai Gold Exchange are
expected to start drying up between now and the week-long Lunar
New Year break, MKS PAMP Group trader Alex Thorndike said. 
    Among other precious metals, silver shed 0.4 percent
to $17.13 per ounce, while platinum was steady at $981. 
    Palladium dropped by 0.8 percent to $770.50 an ounce,
after hitting $795.60, its highest since May 2015, in the
previous session.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by
Christian Schmollinger and Biju Dwarakanath)