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PRECIOUS-Gold slips from 10-month peak, palladium eases off record top

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(Adds comments, details, updates prices)
* Dollar gains after Fed minutes
* Profit-taking weighs on palladium after record surge
* Investors focus on U.S.-China trade talks
By K. Sathya Narayanan

Feb 21 (Reuters) - Gold slipped on Thursday from a 10-month high hit the previous session, after minutes from the U.S. Federal Reserve's last meeting kindled expectations of an interest rate hike this year, while palladium retreated from an all-time peak.

Spot gold fell 0.2 percent to $1,335.66 per ounce at 1102 GMT, having hit $1,346.73 the previous session, its highest level since April 19.

U.S. gold futures slipped 0.7 percent to $1,338.

"Fed minutes have taken some of the dovishness out of the market and is causing a slight softening in gold," Capital Economics analyst Ross Strachan said.

In the minutes of its latest meeting, the Fed said U.S. economy and its labour market remained strong, prompting some expectations of at least one more rate hike this year. Higher rates tend to weigh on non-yielding gold. The dollar gained versus major currencies following the minutes, denting gold's appeal. Morgan Stanley said in a note gold would need more than just a weaker dollar and a dovish stance from the Fed to drive its price higher, adding that the bank had closed its long position in the metal.

Investors also kept a close eye on talks to end a trade dispute between China and the United States. Meanwhile, palladium fell 0.8 percent to $1,476.64 per ounce, after the autocatalyst metal briefly surpassed the $1,500 level on Wednesday.

"Palladium touched $1,500 and that has attracted some profit taking in the short term, but the overall fundamental outlook remains the same," Saxo Bank analyst Ole Hansen said.

"The market is troubled by lack of supply at a time when the emission standards are being tightened and any correction at this stage will be looked upon as a potential buying opportunity," he said.

The supply deficit is likely to widen this year as stricter emissions standards increase demand for catalytic converters, autocatalyst manufacturer Johnson Matthey said last week. However, while prices have risen, holdings of palladium-backed exchange traded funds (ETFs) are now below 800,000 ounces compared with 1.3 million ounces in early 2018. "Since physical metal is in strong demand, it may have forced some closure of holdings," Hansen said.

Among other precious metals, platinum dipped 0.5 percent to $818.83, while silver fell 0.8 percent to $15.90.
(Reporting by Arijit Bose and K. Sathya Narayanan in Bengaluru Editing by Edmund Blair)

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