PRECIOUS-Gold flat as easing trade tensions offset boost from soft dollar

July 24 (Reuters) - Gold prices held steady on Thursday after a sharp drop in the previous session, as easing trade tensions dented demand for safe-haven assets, overshadowing support from a weaker dollar.

FUNDAMENTALS

* Spot gold XAU= was flat at $3,388.49 per ounce, as of 0029 GMT, after dropping 1.3% in the previous session. U.S. gold futures GCcv1 were little changed at $3,495.90.

* The U.S. dollar index .DXY fell to a more than two-week low against its rivals, making greenback-priced gold less expensive for other currency holders.

* Signalling progress on tariffs, U.S. President Donald Trump struck a trade deal with Japan that lowers tariffs on auto imports and spares Tokyo from punishing new levies on other goods in exchange for a $550 billion package of U.S.-bound investment and loans.

* The European Union and the United States are nearing an agreement on a similar trade deal that would impose 15% tariffs on European imports, while waiving duties on some items, according to officials from the European Commission.

* Risk sentiment in the wider financial markets rose on the back of progress in trade talks and hopes that more deals could be in the offering. MKTS/GLOB

* Data showed U.S. existing home sales fell more than expected in June, suggesting the housing market slump could be deepening as higher mortgage rates and economic uncertainty keep potential buyers on the sidelines.

* Focus now shifts to Thursday's weekly jobless claims numbers and S&P Global's flash PMI data to gauge economic health ahead of the Federal Reserve monetary policy decision next week.

* Markets widely expect the Fed to leave interest rates unchanged next week. Odds for a September reduction stand at about 63%, according to the CME FedWatch tool.

* Spot silver XAG= was flat at $39.28 per ounce, platinum XPT= fell 0.1% to $1,410.47 and palladium XPD= slipped 0.3% to $1,273.98.