PRECIOUS-Gold slips amid hopes for new U.S.-Chinese talks

(Recasts first paragraph, updates prices, adds analyst quotes, previous BENGALURU)

NEW YORK, Sept 13 (Reuters) - Gold prices slid on Thursday as risk appetite returned amid hopes for a new round of U.S.-China trade talks.

Spot gold lost 0.3 percent at $1,202.34 by 11:53 a.m. EDT (1553 GMT) after earlier hitting its highest since Aug. 28 at $1,212.49. Bullion gained 0.7 percent in the previous session in its biggest single-day rise since Aug. 24.

U.S. gold futures for December delivery fell $3.40, or 0.3 percent, at $1,207.50 per ounce.

"It's a break of the correlation today between the dollar and gold. Even though the dollar is down, we're not seeing that equate to higher prices in precious metals," said Chris Gaffney, president of world markets at TIAA Bank. "It just seems like the sentiment for the meals is very negative."

The dollar index declined against a basket of major currencies after data showed U.S. consumer prices increased less than expected in August, paring traders' outlook that domestic inflation is accelerating.

A weaker dollar typically makes dollar-priced gold less expensive for holders of other currencies, but the correlation broke on Thursday.

The CPI data came after soft U.S. wholesale price data undermined the case for a faster pace of policy tightening by the Fed. The U.S. central bank is widely expected to raise benchmark interest rates at its September meeting.

Higher rates make gold less attractive since it does not pay interest and costs to store and insure.

Senior U.S. officials sent an invitation to their Chinese counterparts to hold another bilateral trade meeting, raising speculation about a subtle shift in Washington's policy.

The months-long trade rift between Washington and Beijing has prompted investors to buy the U.S. dollar in the belief that the United States has less to lose from the dispute. This has driven investors towards record short positions in Comex gold and heavy liquidations in gold exchange traded funds.

But on Thursday, possible progress in the trade rift pressured the U.S. dollar, traders said.

Gold prices have fallen nearly 12 percent since a peak in April amid intensifying global trade tensions and under pressure from rising U.S. interest rates.

Meanwhile, spot silver dipped 0.1 percent at $14.19 per ounce. Platinum increased 0.6 percent at $803.30, after touching a one-month high of $812.30. Palladium gained 0.7 percent at $980.92 per ounce.

(Reporting by Renita D. Young in New York; additional reporting by Nallur Sethuraman and Vijaykumar Vedala; editing by Richard Pullin, Subhranshu Sahu and Will Dunham)