PRECIOUS-Gold prices inch higher on U.S. dollar weakness

 (Updates prices, adds comment)
    * Phase 1 trade deal will be signed on Jan. 15 - Trump
    * Gold prices could test $1,540/oz next - analyst

    By Sumita Layek
    Jan 2 (Reuters) - Gold prices edged higher on Thursday as
the dollar hovered near a six-month low hit on New Year's Eve
amid bets that U.S. economic outperformance could be coming to
an end.
    Spot gold        rose 0.2% to $1,520.38 per ounce by 0713
GMT, after having touched their highest since Sept. 25 at
$1,525.20 on Tuesday. Bullion ended 2019 with its biggest annual
gain since 2010.             
    U.S. gold futures        were unchanged at $1,523.20.
    "Dollar weakness is the main reason, also the volumes are on
the lower side so gold prices are supported," said Hareesh V,
head of commodity research at Geojit Financial Services.
    The dollar started the New Year under pressure as investors
wagered U.S. economic outperformance could be coming to an end
as optimism on trade brightens the outlook for growth globally.
    The dollar index        against a basket of currencies fell
1.9% last month, having hit its lowest level since July.
    A weaker dollar makes gold cheaper for holders of other
    U.S. President Donald Trump said on Tuesday the Phase 1
trade deal with China would be signed on Jan. 15 at the White
House, although investors still awaited details of the
    Limiting bullion's advance, Asian shares rose on China's
policy easing and news that the world's two top economies would
sign a trade pact soon.            
    "A key thing to lookout for is stock markets, which have
been setting new highs and in case there is some correction, we
can see some capital flows into gold," said Brian Lan, managing
director at dealer GoldSilver Central in Singapore.
    Brexit, U.S. elections, Hong Kong protests and North Korea
tensions will be the other key factors for the market this year,
he said.
    Investors also took stock of a private survey that showed
China's factory activity expanded at a slower clip last month,
but production continued to grow at a solid pace and business
confidence shot up.             
    "(Gold) has continued to demonstrate bullish inclinations as
prices breached $1,500 last week despite new highs in the U.S.
stock market. Bullish technical posturing will likely support
prices as trading activities remain soft for the near term,"
Benjamin Lu, analyst at Phillip Futures, said in a note.
    "A continuation of the positive trend scenario will see gold
prices test the next main station of $1,540."
    Among other precious metals, silver        rose 0.2%
to$17.86 per ounce, while platinum        gained 0.4% to $966.37
and palladium        edged up 0.4% to $1,946.74 per ounce.

 (Reporting by Sumita Layek in Bengaluru; Editing by Subhranshu
Sahu and Rashmi Aich)