PRECIOUS-Gold recovers on short-covering ahead of ECB

* ECB announcement expected at 1145 GMT
* Investors also await U.S. Aug CPI at 1230 GMT
* Palladium set for 4th session of gains

(Adds comments, updates prices)
By Karthika Suresh Namboothiri
Sept 12 (Reuters) - Gold erased earlier losses on Thursday
as investors covered short positions ahead of a European Central
Bank meeting, but improved risk appetite on hopes of a thaw in
U.S.-China trade tensions limited the bullion's advance.
Spot gold XAU= gained 0.4% to $1,503.00 per ounce at 0807
GMT. U.S. gold futures GCcv1 rose 0.5% to $1,510.80 .
"Investors are now waiting for the ECB meeting, and U.S. CPI
data is expected to come negative... We may see some upside in
gold," said Vandana Bharti, assistant vice-president of
commodity research at SMC Comtrade, adding that there was some
short covering in the market.
"So long as it is trading above $1,490, I do not consider it
bearish."
Consumer price index (CPI) from the United States for August
is expected to accelerate by merely 0.1%, compared to 0.3% in
July, according to a Reuters poll, amid expectations the Federal
Reserve will cut interest rates at its meeting next week.
Also expected to hint at monetary policy easing was the ECB,
closely watched for measures the bank was willing to take to
support a dampened economy in the depth of Brexit concerns.
The ECB is set to announce its rate decision at 1145 GMT on
Thursday, followed by ECB President Mario Draghi's news
conference at 1230 GMT.
Meanwhile, the United States on Wednesday agreed to delay
increasing tariffs on $250 billion worth of Chinese imports to
Oct. 15 from Oct. 1 "as a gesture of good will".

Hopes of a breakthrough in negotiations between the world's
two biggest economies lifted risk sentiment in early trade, with
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS jumping to a six-week high. MKTS/GLOB
Gold prices have dropped about 4% from a more than six-year
high of $1,557 it hit on Sept. 4 as renewed risk appetite and
improved global economic data dampened demand for the safe-haven
metal. Gold is highly sensitive to rising interest rates, which
lift the opportunity cost of holding non-yielding bullion.
Signals are mixed for spot gold, as it is stuck in a neutral
range of $1,480-$1,497 per ounce, said Reuters technical analyst
Wang Tao. Among other precious metals, silver XAG= inched 0.6%
higher to $18.19 per ounce, while platinum XPT= rose 0.7% to
$950.60. Meanwhile, palladium XPD= gained 1.4% to $1,593.31 an
ounce.
Palladium was on track for a fourth straight session of
gains, and hit a two-month peak of $1594.61 an ounce.