PRECIOUS-Gold inches lower amid rising equities as Mideast tensions fade

 (Updates prices)
    * U.S. non-farm payrolls due at 1330 GMT
    * Dollar index on track to post best week in 2 months
    * SPDR Gold holdings fell 0.5% on Thursday
    * Palladium set to register best week since mid-June

    By Sumita Layek
    Jan 10 (Reuters) - Gold prices edged down on Friday, after
declining as much as 1% in the previous session, as easing
tensions in the Middle East prompted investors to move back to
riskier bets.
    Spot gold        fell 0.1% to $1,550.66 per ounce by 0732
GMT. Prices fell to their lowest since Jan. 3 at $1,539.78 on
    U.S. gold futures        eased 0.2% to $1,551.60.
    Meanwhile, global stocks rallied to hit record highs after
comments from U.S. President Donald Trump and Iran pointed to a
de-escalation in military tensions, even as the U.S. increased
sanctions on Iran.                        
    "We are looking at the risk-on sentiment, a stronger dollar,
and surging equities," Stephen Innes, a market strategist at
AxiTrader said.
    "Besides the U.S. president suggesting that Iran is standing
down, House Speaker Nancy Pelosi's legislation to limit Trump's
executive powers against Iran is reducing the pressure in the
    The U.S. House of Representatives on Thursday passed a
resolution to stop Trump from further military action against
    Gold, a safe asset during political and economic
uncertainties, had surged over $1,600 on Wednesday after Iran
launched missile strikes on U.S. forces in retaliation to the
killing of its top commander in a drone attack.             
    Further weighing on gold, the dollar        looked set to
post its best week in two months.       
    On the trade front, a 'Phase 1' trade deal between
Washington and Beijing could be signed shortly after Jan. 15,
Trump said on Thursday.             
    Investors now await U.S. non-farm payrolls due at 1330 GMT.
    "Gold remains on the back foot in Asia ... as traders price
out the geopolitical risk in precious metals," Jeffrey Halley, a
senior market analyst for the Asia-Pacific region at OANDA said
in a note.
    "A break of $1,540 implies that a deeper correction to
$1,520 could occur." 
    Indicative of sentiment, holdings of the world's largest
gold-backed exchange-traded fund SPDR Gold Trust      , fell
0.5% to 882.12 tonnes on Thursday.          
    Elsewhere, palladium        fell 0.3% to $2,101.81 an ounce,
having hit a record peak of $2,149.50 in the previous session on
supply woes. For the week, the metal was set to post its best
week since mid-June, rising nearly 6% so far.
    Silver        rose 0.2% at $17.93 per ounce, but was on
track for its worst week in five, while platinum        edged up
0.2% to $968.49.

 (Reporting by Sumita Layek in Bengaluru; Editing by Arun Koyyur
and Rashmi Aich)