PRECIOUS-Gold rises after Powell's remarks bolster rate cut hopes, hurt dollar

* Powell: Fed will act "as appropriate" to sustain economic
growth
* Palladium rises to over 3-month high of $1,591/oz

(Adds details, updates prices)
By Eileen Soreng and Diptendu Lahiri
July 10 (Reuters) - Gold prices recouped losses to rise more
than 1% on Wednesday as the dollar slid after U.S. Federal
Reserve Chairman Jerome Powell fanned expectations of an
interest rate cut, citing risks to the U.S. economy.
Powell said concerns about trade policy and a weak global
economy "continue to weigh on the U.S. economic outlook" and the
Fed intended to "act as appropriate" to sustain a decade-long
expansion. Spot gold XAU= rose 1.2% to $1,414.60 per ounce as of 2:20
pm ET (1820 GMT), having made its way to a high of $1,417.20 an
ounce. Prices had dropped to $1,389.55 earlier in the session.
U.S. gold futures GCv1 settled 0.9% up at $1,412.50 per
ounce.
"Over the past four days we had gold pulling in from a high.
Powell's comments on trade war adding uncertainties in the U.S.
economy left doors open for a rate cut, giving investors an
opportunity to buy gold when it was seeking a support," said
Michael Matousek, head trader at U.S. Global Investors.
Although expectations for a 50-basis-point rate cut at a Fed
meeting later this month have evaporated after forecast-beating
job gains were reported last week, investors still expect a
25-basis-point cut.
"But now, there is chatter in the market about a little
bigger rate cut than that, which has fueled some animal spirit
in the gold market," Matousek said.
Minutes from the Federal Reserve's meeting in June showed
that many Fed officials thought more stimulus would be needed
soon if risks to the U.S. economy did not let up, and several
others leaned in that direction. Powell's comments also prompted the dollar index .DXY to
decline as much as 0.4% against a basket of other currencies.
USD/
"We still think there are upside risks, and dips towards
$1,375 and below $1,375 are an opportunity to go long in gold,"
said Suki Cooper, precious metals analyst at Standard Chartered
Bank.
"The macro factors are still supportive (of gold) but the
near term headwinds are likely to come from weaker physical
markets and any temporary bouts of dollar strength or a bounce
in yields."
On the trade war front, U.S. and Chinese trade officials
held "constructive" talks on trade by phone on Tuesday, White
House economic adviser Larry Kudlow said on Tuesday.
Other precious metals also rose, with silver XAG= up 0.7%
at $15.20 per ounce, and platinum XPT= gained 2.5% to $826 per
ounce.
Palladium XPD= was 2.9% higher at $1,591.25 per ounce,
having hit $1,598 earlier in the session, its highest since
March 22.
"The whole commodities market is up, but besides that
Chevron Phillips Chemical made a $8 billion deal on Tuesday to
develop a petrochemical plant in Qatar, which is providing boost
to palladium," Matousek said. Palladium is used as an agent to reduce the effect of
harmful emissions from petrochemical plants.