PRECIOUS-Gold falls over 1% as investors bank on cash

 (Recasts, adds comments, updates prices)
    * Dollar index firms, Wall Street slips
    * Palladium eases off one-month high hit on Wednesday
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    By Eileen Soreng
    May 21 (Reuters) - Gold fell more than 1% on Thursday as
investors booked profits from recent rallies and some switched
to the safety of cash driven by growing U.S-China trade tensions
and doubts about an economic recovery.
    Spot gold        was down 1.5% to $1,722.78 per ounce by
2:49 a.m. EDT (1849 GMT), having earlier fallen to $1,716.44.
U.S. gold futures        settled 1.7% lower at $1,721.90.
    "Equities are significantly overbought, a lot of money
plowed into the tech industry, so there's a fear trade out there
once you start to unwind ... Gold will come under a bit of
pressure as people try and raise capital," said Phil Streible,
chief market strategist at Blue Line Futures in Chicago.
    "But it's not a throw the towel in on gold (situation). It's
just backing off, that's all."
     Wall Street's main indexes eased as growing Sino-U.S.
tensions and concerns about a recovery from a coronavirus-led
economic slump soured sentiment. Wall Street's fear gauge       
rose 30 points for a brief time during the session.       
    Gold has sometimes moved in tandem with equities this year,
especially as sharp sell-offs prompted investors to sell the
metal for cash or to cover margin calls.
    Also weighing on gold was a firmer dollar       , which has
been a rival safe haven amid rising U.S.-China trade tensions.
    But the latest slide in gold was also driven by
profit-taking after recent strong gains, analysts said, with the
metal having soared to its highest since October 2012 at
$1,764.55 earlier this week.
     "However, the enormous amount of monetary stimulus in the
system, the need for that to continue for some time and the
inflation risk are all bullish for gold in the longer term."
OANDA analyst Craig Erlam said.
    U.S. Federal Reserve policymakers acknowledged the
possibility of further support measures if the economic downturn
    Elsewhere, palladium        dropped 3.7% to $2,023.73 an
ounce after hitting a one-month high on Wednesday. Platinum
       shed 2.4% to $830.60 per ounce.
    Silver        slipped 2.7% to $17.03.

 (Reporting by Eileen Soreng in Bengaluru; Editing by Tom Brown)