PRECIOUS-Gold hits 11-week high on softer dollar, Trump policy uncertainty

Jan 22 (Reuters) - Gold prices climbed to a fresh 11-week high on Wednesday, buoyed by a weaker dollar and as uncertainty surrounding U.S. President Donald Trump's trade policies boosted safe-haven demand.

FUNDAMENTALS

Spot gold XAU= was up 0.1% at $2,748.58 per ounce, as of 0105 GMT, after hitting its highest since Nov. 5 earlier in the session. U.S. gold futures GCcv1 added 0.1% to $2,763.40.

Trump held back from imposing trade barriers on his first day in office on Monday, pushing the dollar lower. USD/

A weaker dollar makes gold more attractive for foreign buyers. Gold is considered a safe investment during economic and geopolitical uncertainty.

Trump vowed to hit the European Union with tariffs and said his administration was discussing imposing a 10% tariff on goods imported from China on Feb. 1.

Gold's appeal as an inflation hedge may be diminished if Trump's policies, which are seen as inflationary, lead the Federal Reserve to maintain interest rates higher for longer.

After two years of progress on inflation and surprisingly persistent economic growth, the Fed next week meets with one eye on new Trump administration policies and another on a bond market that has ratcheted up borrowing costs even as U.S. central bankers have been cutting interest rates.

The Fed is expected to hold its benchmark interest rate steady in the current 4.25%-4.50% range at its next policy meeting on Jan. 28-29, after reducing it by a full percentage point since September.

Higher interest rates dampen the appeal of non-yielding gold.

SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.85% to 871.66 tonnes on Tuesday from 879.12 tonnes on Friday. GOL/ETF

Spot silver XAG= was flat at $30.85 per ounce, palladium XPD= gained 0.1% to $958.11 and platinum XPT= steadied at 944.05.

(Reporting by Rahul Paswan in Bengaluru; Editing by Subhranshu Sahu)

((RahulKumar.Paswan@thomsonreuters.com ; If within U.S. +1 646 223 8780;;))