PRECIOUS-Gold bounces up on hopes for U.S.-China trade talks

 (New throughout, updates prices, market activity and comments;
adds second byline, NEW YORK dateline)
    * Chinese currency strengthens, boosting gold
    * Gold still headed for 2 pct monthly decline 
    * Silver, platinum, palladium also down for month

    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, July 31 (Reuters) - Gold prices rose on
Tuesday, reversing early losses as the Chinese yuan strengthened
against the dollar after a report said the United States and
China were trying to restart negotiations to defuse a trade war.
    In early trade, a stronger dollar and rising U.S. interest
rates had sent bullion falling to its lowest in a week and a
    "Gold turned positive on the idea that there's a possibility
of negotiating with China," said George Gero, managing director
of RBC Wealth Management.
    "If they do negotiate and something good comes out of it, it
is positive for metals, because it would help the Chinese come
back into the market and take deliveries. There's been some
worry about the Chinese not taking deliveries because of the
tariffs and expensive dollar," Gero added.
    Spot gold        rose 0.3 percent to $1,224.48 per ounce by
1:43 p.m. EDT (1743 GMT), rebounding after touching its lowest
since July 19. The precious metal is heading for a 2 percent
monthly decline.
    U.S. gold futures         for August delivery settled up
$2.40, or 0.2 percent, at $1,223.70 per ounce. 
    "The Chinese currency is preventing (gold) from dropping
much further like we saw earlier in the morning," said Ryan
McKay, commodities strategist at TD Securities.
    The Chinese yuan had been weakening against the dollar,
pressuring greenback-denominated gold. That pressure abated,
providing gold some support, McKay added.             
    Some commodities prices have strengthened as the dollar has
slowly retreated from recent highs, said David Meger, director
of metals trading at High Ridge Futures.
    "We’ve seen a pickup in commodity demand. Some of that is
relative to the slight weakness in the dollar," he said. "We
expect for commodities to continue to recover off the recent
    The dollar was slightly higher versus a currency basket,
following a three-month streak of gains, with the U.S. Federal
Reserve set to reaffirm the outlook for further gradual rate
rises at the end of its two-day monetary policy meeting on
    Higher U.S. interest rates tend to boost the dollar, making
dollar-priced  gold more expensive for holders of other
    Meanwhile, silver        gained 0.3 percent at $15.53 an
ounce, poised to end the month down more than 3 percent. 
    Platinum        rose 2.1 percent to $841.10 per ounce,
headed for a monthly decline of less than 1 percent. Palladium
       increased 0.7 percent at $935.30, set to end July down
about 2 percent.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
David Gregorio and Jon Boyle)