(Adds graphic, updates prices)
* Palladium hits record high of $1,739.93/oz
* Britain and EU to meet at summit starting Thursday
* Gold priced in sterling dips to 2-1/2 month low
By Asha Sistla
Oct 15 (Reuters) - Gold fell 1% on Tuesday as growing risk appetite boosted investor demand for equities, while a sustained supply crunch in palladium propelled the price of that precious metal to a record high.
Spot gold fell 0.8% to $1,481.40 per ounce as of 2:35 p.m. EDT (1835 GMT), having slipped 1% earlier in the session.
U.S. gold futures settled down 0.9% at $1,483.50.
“Right now what’s pushing it (gold) down is the stocks. We have earnings coming out now and stocks look strong. There is no risk aversion right now,” said Bob Haberkorn, senior market strategist at RJO Futures.
U.S. equity markets rose on strong earnings reports, even as optimism faded over the latest China-U.S. trade truce.
“Gold needs a headline to push it higher; the U.S. Federal Reserve to talk about rate cuts or something to happen on the trade talks. If the deal falls apart and the Fed cuts rates, gold will go up,” RJO Futures’ Haberkorn added.
The U.S. Federal Reserve meets at the end of the month to decide on whether to implement further interest rate cuts.
Bloomberg reported on Monday that China wanted more talks to hammer out details of the phase-one deal before signing it.
Investors are also watching a make-or-break summit between Britain and the European Union on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on Oct. 31, a disorderly no-deal exit or a delay.
Gold denominated in sterling slid over 2% to its lowest since end-July at 1,154.35 pounds an ounce.
Palladium extended its strong rally, gaining 1.1% to $1,733.06 an ounce, after hitting a record $1,739.93. The metal, used in vehicle exhaust systems to reduce harmful emissions, has rallied more than $300 since early August, when it touched the lowest in nearly two months.
“Palladium is in short supply. It will continue to be so and higher prices maybe till $2,000 is well within the realm of possibilities, particularly if we see automotive activity rebound a bit,” said Bart Melek, head of commodity strategies at TD Securities in Toronto.
“We have a structural deficit problem within the palladium market. The inventories and exchange traded funds which have been used over the years to feed the gap between primary supply and demand are down.”
Among other metals, silver fell 1.4% to $17.40 per ounce, while platinum fell 1.2% to $882.08.
Reporting by Asha Sistla and K. Sathya Narayanan in Bengaluru; Editing by Richard Chang and Steve Orlofsky