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PRECIOUS-Gold stalls as Trump's tariff threat on China buoys dollar

Swati Verma and Brijesh Patel

* Trump says he will hike U.S. tariffs on Chinese goods this week

* SPDR gold holdings fall to lowest since Oct. 11 (Adds comments, updates prices)

May 6 (Reuters) - Gold prices treaded water on Monday as investors sought safety from the Trump administration's threat of further tariffs on China in the U.S. dollar, but a slide in global equity markets provided underlying support.

Spot gold was little changed at $1,279.51 per ounce as of 11:38 a.m. EDT (1537 GMT). U.S. gold futures were mostly unchanged at $1,281 an ounce.

"We had two big geo-political events over the weekend, one is the news from Iran with U.S. carrier, bombers group headed to Middle East and all the stuff with China about tariffs," said Bob Haberkorn, senior market strategist at RJO Futures.

The United States is deploying a carrier strike group and a bomber task force to the Middle East to send a clear message to Iran, U.S. President Donald Trump's national security adviser, John Bolton, said on Sunday.

"The two geo-political risk events should have helped gold trade higher but the dollar is strengthened by actions from Trump which has kept gold lower today," Haberkorn said.

The U.S. dollar firmed against most major currencies on Monday after Trump said he would raise tariffs on $200 billion worth of Chinese goods this week.

Trump said he would target a further $325 billion of Chinese goods with 25 percent tariffs "shortly," essentially covering all products imported into the United States from China.

Stocks around the world tumbled and oil prices slumped after Trump's announcement, limiting losses in gold.

"We are seeing the markets reacting to uncertainty about trade talks. It is creating some nervousness in the markets. The dollar is a tad stronger, countering some of the potential moves we would have seen otherwise in gold," said Ole Hansen, commodity strategist at Saxo Bank.

Last week, gold dropped to a four-month low after the U.S. Federal Reserve Chairman Jerome Powell dashed hopes of a rate cut this year.

Hedge funds and money managers switched to a net long position in COMEX gold in the week to April 30, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

"The hedge fund community is extremely confused, flipping long and short positions. $1,290 is the key level for gold, and if prices break above that we could see quite an addition on the long side," Hansen said.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold backed exchange, were at their lowest since Oct. 11. Holdings fell 0.6 percent on Friday.

Silver fell 0.3 percent to $14.88 per ounce, while platinum lost 0.1 percent, to $868.50.

Palladium slipped 2.9 percent to $1,331.01 per ounce. (Reporting by Brijesh Patel in Bengaluru Editing by Tom Brown)