PRECIOUS-Gold drops as bets fade for big Fed rate cut fade; eyes on trade talks

(Adds comment, details, updates prices)
* Markets eye G20 for cues on U.S.-China trade talks
* Dollar rebounds from three-month low
* Gold marks first decline in seven sessions

By Karthika Suresh Namboothiri
June 26 (Reuters) - Gold prices dipped on Wednesday on
signals the U.S. Federal Reserve would not make too steep a cut
to interest rates next month, but still held ground above the
key psychological $1,400 level.
Spot gold XAU= shed 0.8% to $1,411.21 per ounce as of 1:56
p.m. EDT (1756 GMT), having fallen more than 1% earlier in the
session.
Gold is on track to snap a six-session streak of gains and
also its biggest one day percentage fall in more than two weeks.
U.S. gold futures GCcv1 settled 0.2% lower to $1,415.40.
"In gold, people were looking for a reason to sell some just
because over the past week and a half gold has gone up
exponentially. It had that break down and then kept on running,"
said Michael Matousek, head trader at U.S. Global Investors.
"You're seeing people playing the volatility."
In the previous session, prices had hit a six-year peak of
$1,438.63 primarily on the back of heightened expectations that
the Fed, like many counterparts around the world, would cut
rates in acknowledgment of tepid economic stimulus and weak
data.
Fed Chairman Jerome Powell stressed the central bank's
independence from U.S. President Donald Trump, who is pushing
for rate cuts. St. Louis Fed President James Bullard, considered
one of the most dovish U.S. central bankers, surprised some
investors by saying a 50 basis point cut in rates "would be
overdone." Following the statements from the Fed officials, gold sapped
gains and has dropped nearly 2.6%. Lower interest rates reduce
the opportunity cost of holding non-yielding gold, prompting
investors to sell some.
The comments by Powell and Bullard have assisted in
"enabling the dollar to find some much-needed support and
undermining buck-denominated precious metals," Fawad Razaqzada,
market analyst with Forex.com, wrote in a note, adding that a
rebound in equities on trade talk hopes between U.S. and China
has further pressured gold.
Trump is expected to meet with Chinese leader Xi Jinping at
the G20 summit in Japan, where he said there is a possibility a
deal could be struck, omitting the need for imposing more
tariffs on goods from China. "As time goes on, there are more uncertainties and that's
what is keeping gold prices above $1,400," said an analyst based
in New York.
"Prices should hold and continue to trend higher, unless
there is some resolution on (U.S.-China) trade issues."
Among other precious metals, silver XAG= fell 0.3% to
$15.31 per ounce, while platinum XPT= rose 0.8% to $812.50.
Spot palladium XPD= was 0.4% higher at $1,534.00 per ounce.