CORRECTED-PRECIOUS-Gold trims losses as investors weigh conflicting signals on Mideast talks

By Noel John

March 24 (Reuters) - Gold prices pared some losses after dropping more than 2% earlier on Tuesday, as investors remained wary about the Middle East conflict amid conflicting signals over Iran-U.S. talks.

Spot gold XAU= was down 0.2% to $4,396.74 per ounce around 0820 GMT. Prices dropped more than 8% on Monday to a low of $4,097.99 per ounce, the weakest level since November 24, before paring some losses.

U.S. gold futures GCcv1 for April delivery slipped 1.5% to $4,340.90.

Iran has denied any negotiations with the U.S. after President Donald Trump postponed a threat to bomb Iran's power grid, citing what he described as productive talks with unnamed Iranian officials. Tehran launched multiple waves of missiles at Israel on Tuesday, the Israeli military said.

"It's all pertaining (to) the event that is unfolding in this U.S.-Israel-Iran conflict. Key stakeholders are not showing uniform messaging across the board over here....so what we see is that markets are in a flux right now," said Kelvin Wong, a senior market analyst at OANDA.

Benchmark Brent held above $100 a barrel. Higher crude prices tend to fuel inflation by pushing up transport and manufacturing costs.

Although rising inflation typically boosts gold's appeal as a hedge, high interest rates weigh on demand for the non-yielding asset.

Spot gold prices have fallen about 18% since the U.S.-Israeli war on Iran started on February 28.

"Liquidity needs could keep gold under pressure for four to six weeks, based on historical trends. Price risks tend to rise if oil shocks give way to inflation fears or rising debt or recession risks," analysts at Standard Chartered said in a note.

Elsewhere, spot silver XAG= lost 3.4% to $66.80 per ounce. Spot platinum XPT= fell 2.1% to $1,841.68 and palladium XPD= shed 2.7% to $1,395.25.