PRECIOUS-Palladium hits record high on China impetus; lower dollar lifts gold

(Adds comment, details and updates prices)

* Palladium hits record high of $1,342.43/oz

* Fed minutes show policymakers urge patience on future rate hikes

BENGALURU, Jan 9 (Reuters) - Palladium scaled a fresh all-time peak on Wednesday after a Chinese official said the government was contemplating policies to increase domestic buying of automobiles, while gold was propped up by a falling dollar.

Palladium was up 0.3 percent at $1,320.49 an ounce at 3:12 p.m. EST (2012 GMT), having touched a record high of $1,342.43 earlier in the session.

The precious metal, used in emissions-reducing catalysts for vehicles, is likely to draw strength from a Chinese plan to boost domestic spending on items such as autos and home appliances this year.

U.S.-China trade talks ended on Wednesday with a Chinese pledge to buy U.S. goods, Washington said.

“We are getting an idea that there is a potential trade deal between China and the United States and some internal stimulus within China,” said Bart Melek, head of commodity strategies at TD Securities.

“That ultimately means better consumption of vehicles in China and broadly in the emerging markets,” he said, adding that the increased palladium demand comes at a point when the market is already very tight.

Spot gold gained 0.5 percent to $1,291.51 an ounce, while U.S. gold futures settled 0.5 percent higher at $1,292.

The dollar index, which measures the greenback against a basket of six major currencies, slid to its lowest level since October after the Federal Reserve expressed caution about future rate hikes and on optimism around the U.S.-China trade talks.

“It looks like weight has been lifted from the shoulders of the (gold) traders who were concerned about the interest rate hikes,” said George Gero, managing director at RBC Wealth Management.

Minutes from the Fed’s Dec. 18-19 policy meeting showed some policymakers could be patient about future interest rate increases and a few did not support the central bank’s rate hike that month.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar in which gold is priced.

Traders would now be eyeing developments in the U.S.-China trade talks, the U.S. government shutdown and Brexit negotiations for further direction, Gero added.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.03 percent to 796.53 tonnes on Tuesday. The holdings are still around their highest level since August last year.

Silver inched 0.1 percent higher to $15.67 per ounce, while platinum rose 0.6 percent to $819.75. (Reporting by Arijit Bose, Swati Verma and Eileen Soreng in Bengaluru; editing by Rosalba O’Brien)