PRECIOUS-Gold prices inch down on upbeat risk sentiment

* Bullish positions in COMEX gold, silver contracts cut
* Dollar pares losses, but on track for worst month since
Jan 2018

(Updates prices)
By K. Sathya Narayanan
Oct 21 (Reuters) - Gold eased on Monday on improved appetite
for riskier assets, while investors awaited further clarity from
the U.S. Federal Reserve on more possible interest rate cuts
this year.
Spot gold XAU= was down 0.3% at $1,485.03 per ounce as of
1:52 p.m. EDT (1752 GMT). U.S. gold futures GCv1 settled down
0.4% at 1,488.10.
"Equity markets are doing pretty well. That means risk
appetite is there, but at the same time, the dollar is
rebounding a little bit and two year (Treasury yields) rates
moved higher," said Bart Melek, head of commodity strategies at
TD Securities. US/
Appetite for riskier assets improved on hopes for a
resolution to the protracted U.S.-China trade war and Britain
avoiding a European Union exit. MKTS/GLOB
The dollar .DXY rebounded slightly, pressuring bullion,
but was still heading for its worst month since January 2018,
against its key rivals. USD/
A strong dollar makes greenback denominated gold costlier
for investors holding other currencies, while higher Treasury
yields increase the opportunity cost of holding non-yielding
bullion.
"We continue to have ambiguity about central bank monetary
policy, there is some hope that the U.S. economy will do better
than thought. Various Fed speakers are telling that additional
rate cuts, moving into 2020, may not be on the cards," Melek
said.
Bullion has risen about 16% so far this year and one of the
major supporting factors is hope for further rate cuts by the
Fed. However, amid mixed signals from Fed policymakers it is
unclear if they, overall, will support a cut. Federal fund futures show that traders see an 87% chance for
a 25 basis-point rate cut by the U.S. central bank in its
month-end monetary policy meeting. FEDWATCH
"Ultimately the main driver in gold is the U.S. Fed and what
they're doing with the (interest) rates," Bob Haberkorn, senior
market strategist at RJO Futures said.
Meanwhile, hedge funds and money managers cut their bullish
positions in COMEX gold and silver contracts in the week to Oct.
15, data showed on Friday. CFTC/
Elsewhere, silver XAG= rose 0.1% to $17.56 per ounce,
while platinum XPT= was down 0.2% at $887.09.
Palladium XPD= was up 0.1% at $1,756.55 an ounce, having
hit an all-time high of $1,783.21 last week.
"Sell rates for palladium reached the highest level since
January. This suggests the recent rally has been driven by
fundamentals, rather than speculative interest," ANZ Bank said.
"And with the market likely to remain tight for the
foreseeable future, we believe there is plenty more upside for
(palladium) prices," ANZ added in a note.