(Adds comments, details; Updates prices)
* WHO convenes emergency meeting on China virus outbreak
* Lunar New Year celebrations to begin this weekend
* Palladium off record high, slips nearly 1%
By Diptendu Lahiri
Jan 21 (Reuters) - Gold briefly hit a two-week high on Tuesday as concerns over the coronavirus outbreak in China lifted demand for safe havens, but then retreated as investors took profits on the view that buying had been overdone.
Still, lingering Mideast tensions and political uncertainty in Washington kept prices above $1,550 an ounce.
Spot gold was down 0.6% at $1,552.05 per ounce by 1405 GMT, after hitting its highest since Jan. 8 at $1,568.35 earlier in the session. U.S. gold futures fell 0.5% to $1,552.20 per ounce.
“The fear effect of the contagion in China has been a trigger for gold but there is no strong evidence of it taking the shape of an epidemic,” OANDA analyst Craig Erlam said, adding some investors were booking profits after the spike earlier in the session.
Lingering uncertainties over tensions in the Middle East and an impeachment trial against U.S. President Donald Trump kept gold prices above the $1,550 level, Erlam said.
A coronavirus outbreak that began in the central Chinese city of Wuhan sent ripples through financial markets, as the World Health Organization called a meeting for Wednesday to consider declaring an international health emergency.
Bullion is considered a safe asset during times of financial and political uncertainty.
Gold broke above $1,600 an ounce earlier this month after the killing of an Iranian general in a U.S. airstrike heightened tensions and the metal has been trading within a $50 range since then.
“However, it is hard to see gold progressing above $1,600 an ounce until the health emergency in China escalates sharply and becomes a regional problem,” Jeffrey Halley, senior market analyst, OANDA, said in a note.
On the physical side, China’s gold consumption fell for the first time in three years in 2019, figures released by the country’s gold association showed on Tuesday, as high prices and an economic slowdown hit buying in the world’s biggest gold market.
Markets also kept a tab on developments in the World Economic Forum in Davos and awaited the European Central Bank’s first policy meeting of the year this week.
Palladium fell 3.3% to $2,416.19. The auto catalyst metal hit a record high of $2,582.19 in the previous session.
Silver fell 1.9% to $17.72, while platinum dropped 2.6% to $989.65 per ounce. (Reporting by Diptendu Lahiri and Asha Sistla in Bengaluru; Editing by Mark Potter/Louise Heavens/Susan Fenton)