* SPDR gold holdings have best one-day gain in nearly 2 months
* Investors eyeing U.S.-Iran developments -analyst
* No collapse in China trade talks -Trump (Adds quote, updates prices)
By Eileen Soreng
May 14 (Reuters) - Gold retreated from a one-month high hit earlier on Tuesday as stock markets and the dollar took heart after the United States and China agreed to keep negotiations going to end their prolonged trade war.
Spot gold was 0.3% lower at $1,295.18 per ounce as of 1:49 p.m. ET (1749 GMT), after hitting $1,303.26 earlier in the session, its highest since April 11.
U.S. gold futures settled down 0.4% at 1,296.3.
“We are seeing a little readjustment because the dollar index is back up a little and stocks are rebounding and (gold)traders are taking a little money off the table for now,” said George Gero, managing director at RBC Wealth Management.
The dollar index was up about 0.2% after falling to near a one-month low in the previous session. U.S. stocks climbed following optimistic comments from Washington and Beijing.
U.S. President Donald Trump said on Tuesday that trade talks with China have not collapsed and called the widening U.S.-China tariff war “a little squabble,” even as his administration readies 25% duties on all remaining Chinese imports.
“The impact of the U.S.-China trade war has conflicting implications for gold,” Fawad Razaqzada, market analyst with Forex.com, wrote in a note.
Gold investors will have to consider the impact on physical demand from China in the event of a no deal, while higher tariffs on Chinese exports will also hurt the U.S. consumer, further weighing on demand, Razaqzada added.
Gold climbed 1.1% on Monday, marking its biggest one-day percentage rise since Feb. 19, after China announced it would impose higher tariffs on a range of U.S. goods, which followed Washington’s decision last week to hike levies on $200 billion in Chinese imports.
Investors were also keeping tabs on escalating tensions between the United States and Iran after Saudi Arabia said two of its oil tankers were among those attacked off the coast of the United Arab Emirates.
Headlines such as escalating Iran tensions are keeping gold from selling off, Gero said.
A rise in investor interest in bullion was also evident after holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.44% on Monday, its biggest one-day rise in nearly two months.
“Gold is turning bullish on the daily charts as prices have broken above the previous higher low at $1,290,” Lukman Otunuga, research analyst at FXTM, said in a note, adding, “a solid breakout and daily close above $1,300 is likely to encourage a move higher towards $1,310 and $1,324, respectively.”
Among other precious metals, silver was up 0.1% at $14.78 per ounce.
Platinum rose 0.4% to $856.66 an ounce, while palladium gained 1.4% to $1,340.52. (Reporting by Eileen Soreng in Bengaluru; Editing by Marguerita Choy, Alistair Bell and Dan Grebler)