PRECIOUS-Gold steady as cloudy U.S. rate hike outlook drags on dollar

    BENGALURU, July 18 (Reuters) - Gold prices held steady on
Tuesday near two-week highs hit in the previous session, as the
dollar hovered near multi-month lows on fading prospects for
further U.S. rate hikes this year.
    
    FUNDAMENTALS    
    * Spot gold        was up 0.1 percent at $1,234.48 per ounce
at 0033 GMT, after hitting its highest since July 3 at $1,235.94
in the previous session.  
    * U.S. gold futures         for August delivery were mostly
unchanged at $1,233.80 per ounce.
    * SPDR Gold Trust      , the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.21 percent to
827.07 tonnes on Monday from 828.84 tonnes on Friday.          
    * The U.S. dollar was near a 10-month low against a basket
of major currencies on Tuesday, pressured by uncertainty over
the pace of the Federal Reserve's policy tightening.       
    * Banks expect gold to match its 2016 average this year, but
cut their silver price forecasts after the metal slid 9 percent
in the second quarter. A poll conducted by Reuters this month
returned an average silver price        forecast of $17.32 an
ounce for 2017, down from an average view of $17.98 in a similar
poll conducted three months ago.                         
    * Palladium is expected to hit its highest annual average
price on records going back three decades this year after
tightness in the lending market pushed prices to 16-year highs
last month.                         
    * South Korea on Monday proposed military talks with North
Korea, the first formal overture to Pyongyang by the government
of President Moon Jae-in, to discuss ways to avoid hostile acts
near the heavily militarised border.             
    * The United States on Monday launched the first salvo in
the renegotiation of the 23-year-old North American Free Trade
Agreement (NAFTA), saying its top priority for the talks was
shrinking the U.S. trade deficit with Canada and Mexico.
            
    * London's economy is wobbling from the early effects of
Brexit judging from the capital's faltering housing market,
fewer European Union citizens seeking work and weaker job
creation, according to a report from the Centre for London think
tank.                 
    
      DATA EXPECTED ON JULY 18 (GMT)
      1230   U.S.       Import, Export prices       June 
      1255   U.S.       Redbook                     weekly 
      1400   U.S.       NAHB Housing Market Indx    July 
      2000   U.S.       Overall Net Capital Flow    May 
    

 (Reporting by Arpan Varghese in Bengaluru)