BENGALURU, Jan 9 (Reuters) - Gold held steady on Wednesday as a surge in risk appetite on hopes of a Sino-U.S. trade deal offset support from expectations of a pause in U.S. Federal Reserve rate hikes.
Spot palladium, meanwhile, notched up a new record high on Wednesday at $1,330 per ounce due to tight supplies.
* Spot gold was little changed at $1,285.62 by 0041 GMT.
* U.S. gold futures were also steady at $1,286.70 per ounce.
* The United States and China will continue trade talks in Beijing for an unscheduled third day, a member of the U.S. delegation said on Tuesday amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to China's markets.
* Trump, in a post on Twitter on Tuesday, reiterated his recent statement that the talks with China were going well but gave no details.
* An index of world stock markets rose for the third straight session on Tuesday, with investors hopeful that the United States and China would strike a deal to end their months-long trade war.
* Federal Reserve Chairman Jerome Powell said last week that the central bank was not on a preset path of rate hikes and will be sensitive to the downside risks markets are pricing in.
* Gold tends to gain when expectations of interest rate hikes ease because lower rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, in which it is priced.
* Jeffrey Gundlach, chief executive of Doubleline Capital, said on Tuesday that the high-yield "junk" bond market, which has been a leading indicator of recessions, is flashing "yellow now."
* Investors, meanwhile, focused on the risk of a euro zone recession after data showed more signs of slowing in the region.
* German industrial output unexpectedly fell in November for the third consecutive month, adding to signs that companies in Europe's largest economy are shifting into a lower gear due to mounting risks from abroad.
* British Prime Minister Theresa May's government suffered a defeat in parliament on Tuesday when lawmakers who oppose leaving the European Union without a deal won a vote on creating a fresh obstacle to a no-deal Brexit.
* Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.03 percent to 796.53 tonnes on Tuesday from 796.78 tonnes on Monday. (Reporting by Nallur Sethuraman in Bengaluru; editing by Richard Pullin)