PRECIOUS-Gold falls as dollar firms after China halts trade talks

* Speculators raise net shorts in COMEX Gold

* U.S. Fed’s two-day policy meeting starts on Tuesday

* U.S. tariffs on $200 bln Chinese imports come into effect Monday (Adds quote, updates prices)

BENGALURU, Sept 24 (Reuters) - Gold edged lower on Monday as the dollar held firm on news that China has cancelled trade talks with the United States, while investors eyed this week’s U.S. Federal Reserve meeting for guidance on future rate hikes.

Investors were focused on Sino-U.S. trade tensions, after China cancelled mid-level trade talks with the United States as well as a proposed visit to Washington by vice premier Liu He, originally scheduled for this week.

Spot gold was up 0.1 percent at $1,198.36 by 0717 GMT, after declining as much as 1.3 percent on Friday.

U.S. gold futures were little changed at $1,201.60 an ounce. Liquidity was thin during Asian hours on Monday as markets in Japan and China were closed for a holiday.

“The news out of China does seem to be having some negative impact (on gold) with the U.S. dollar cautiously higher and gold a bit lower by extension,” said Ilya Spivak, a currency strategist for Dailyfx.

“The moves are relatively tepid because much of what is happening was telegraphed earlier and is already priced in to some degree,” Spivak said.

Last week, China added $60 billion of U.S. products to its import tariff list, retaliating against U.S. duties on $200 billion of Chinese goods that come into effect on Monday.

Although gold is generally considered to be a safe-haven asset, the months-long trade rift between Washington and Beijing has prompted investors to buy U.S. dollars in the belief that the United States has less to lose from the dispute.

The dollar rose 0.1 percent against a basket of currencies at 94.263.

Gold has fallen over 12 percent since a peak in April amid the intensifying trade disputes and as rising U.S. interest rates diminish demand for non-interest bearing bullion.

Investors are awaiting details from the two-day Federal Reserve meeting starting Tuesday, where the U.S. central bank is widely expected to raise benchmark interest rates and shed light on the path for future rate hikes.

“Gold traditionally trades poorly ahead of anticipated Fed hike and the dollar will have an upper ground,” said Stephen Innes, APAC trading head at OANDA.

Meanwhile, speculators increased their net short position in COMEX gold contracts in the week to Sept. 18, U.S. data showed on Friday.

Initial support for the metal is at $1,192-$1,194, while resistance comes in at $1,200, MKS PAMP Group said in a note.

Among other precious metals, spot silver rose 0.2 percent to $14.27. Platinum fell 0.4 percent to $822.98, after hitting its highest in six weeks at $838.40 on Friday.

Palladium fell 0.1 percent to $1,048.30, after hitting a five-month high at $1,056.72 in the previous session. (Reporting by Nallur Sethuraman in Bengaluru; editing by Sunil Nair and Subhranshu Sahu)