PRECIOUS-Gold inches up on U.S.-China trade deal uncertainty

(Recasts, updates prices, adds comment)

* Holdings in SPDR Gold fell 0.16% on Thursday

* Silver set for steepest weekly fall since July 2017

Nov 8 (Reuters) - Gold prices edged higher on Friday as uncertainty around U.S.-China trade deal dented investors’ risk appetite, but the metal was set for its biggest weekly decline in 2-1/2 years.

Spot gold rose 0.3% to $1,472.08 per ounce at 0804 GMT, but were poised for its biggest weekly drop of about 3% since May 2017. In the previous session, prices dropped 2% to their lowest in more than a month.

U.S. gold futures rose 0.4% at $1,472.1 per ounce.

Asian stocks retreated from six-month highs as conflicting signals from China and the United States on progress made in trade talks deflated market hopes of a near term truce to end their damaging tariff war.

“I don’t think the market is going to be convinced until there is ink on paper,” said Ilya Spivak, a senior currency strategist at DailyFx.

“The market has a lot of questions, and that’s why ... even though there was a selloff, gold did not break below the lows in August.”

An agreement between the United States and China to roll back existing tariffs as part of a ‘phase one’ trade deal faced fierce internal opposition at the White House and from outside advisers, multiple sources familiar with the talks said.

“Market is too sensitive to all the information that is coming down; the venue (for the deal signing) has not been decided, internally the U.S. administration is having some problems with these tariff rollback,” said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers.

However, he added “For now, the trend will continue on the lower side only.”

Gold prices have risen over 14% so far this year mainly due to the protracted trade war that spurred global economic slowdown fears.

Reflecting sentiment, holdings in the world’s largest gold-backed exchange-traded fund SPDR Gold Trust dipped 0.16% on Thursday.

“Given the positivity that is reflected in equities and rates markets, the acknowledgement that things could just as easily take a turn for the worse appears to be expressed through gold positions at the moment,” UBS said in a note.

“This raises the risk that further improvements towards a credible and comprehensive trade deal would trigger substantial unwinding in the gold market.”

Elsewhere, silver dropped 0.1% to $17.09 per ounce, and was set to fall about 6% for the week, its steepest drop since July 2017.

Platinum fell 0.2% to $907.07 per ounce, poised for a more than 4% drop for the week. Palladium lost 0.1% to $1,799.47, and was headed for its worst week in five. (Reporting by Sumita Layek and Diptendu Lahiri in Bengaluru; Editing by Sherry Jacob-Phillips, Christian Schmollinger and Uttaresh.V)