PRECIOUS-Gold, silver drop on firm dollar, broad market selloff

By Ishaan Arora

Feb 5 (Reuters) - Gold and silver prices fell sharply in a broader market selloff on Thursday, as the dollar advanced to a near two-week high and U.S.-China trade tensions showed signs of easing.

Spot gold XAU= declined 0.9% to $4,917.61 per ounce, as of 0754 GMT, retreating from a near one-week high hit earlier in the session. Prices had fallen by nearly 4% earlier.

U.S. gold futures GCcv1 for April delivery dropped 0.3% to $4,936.30 per ounce.

"The dollar received a new lease of life with the (Kevin) Warsh nomination (as Federal Reserve chair), ... traders are more circumspect now on gold in light of recent extreme volatility," Tim Waterer, KCM chief trade analyst, said.

The dollar .DXY rose to a near two-week high on Thursday, making greenback-priced gold more expensive for other currency holders. USD/

On the geopolitical front, Iran and the U.S. have agreed to hold talks in Oman on Friday, while President Donald Trump said he had "very positive" talks with President Xi Jinping on Wednesday.

Prices of commodities, from crude oil to copper, dived as global tensions eased.

"Sentiment (has) turned soggy across most asset classes..., with losses feeding into one another and creating a self-reinforcing feedback loop amid thin market liquidity," said Christopher Wong, a strategist at OCBC.

Asian stocks slumped as concerns about the exploding costs of AI investment encouraged a rotation out of tech, while a renewed slide in silver squeezed leveraged positions that were already under water. MKTS/GLOB

Spot silver XAG= fell 9.3% to $79.88 an ounce after tumbling as much as 15% earlier. Last week, the precious metal touched a record high of $121.64.

"The industrial demand has vanished at the higher levels, and as solar panel producers in China look for alternatives," said Kunal Shah, head of research at Nirmal Bang Commodities.

Spot platinum XPT= dropped 8.7% to $2,125.80 per ounce after hitting an all-time high of $2,918.80 on January 26, while palladium XPD= shed 2.8% to $1,725.53.