PRECIOUS-Gold slips as hopes for U.S.-China trade deal boost dollar

* U.S. ISM non-manufacturing report due later in the day

Dollar close to its highest in almost a week (Updates prices)

By Diptendu Lahiri

Nov 5 (Reuters) - Gold prices fell on Tuesday for a second session, as hopes of a Sino-U.S. trade deal bolstered the dollar and sparked appetite for riskier assets, blunting investors' interest in holding the non-yielding bullion.

Spot gold was down 0.2% at $1,506.33 per ounce, as of 0528 GMT, while U.S. gold futures declined 0.2% to $1,508.40 per ounce.

Beijing and Washington have shown signs of progress in trade talks with the Financial Times saying on Monday that the United States is considering whether to drop some tariffs on Chinese goods.

"The recent hopes of a trade truce between the United States and China have led to the strengthening of the dollar overnight, dragging prices today," Michael McCarthy, chief market strategist at CMC Markets said by telephone.

The U.S. dollar was close to its highest in almost a week against a basket of rivals on Tuesday, while Asian shares closed in on their July peak, on growing optimism for the United States and China to strike a preliminary deal to scale back their long-drawn trade war.

A stronger dollar makes gold expensive for holders of other currencies.

"Some positive trade headlines over the weekend and buoyant risk sentiment with equities at all-time highs will be a test of gold's resilience and market conviction in gold's uptrend," UBS strategist Joni Teves said in a note.

Shaving some fears of an upcoming recession, recent data suggests the outlook for the world's largest economy is not as bad as some had feared, although the U.S. Federal Reserve has cut interest rates three times this year.

After data last week showed U.S. job growth had slowed less than expected in October, investors now await a U.S. ISM non-manufacturing report due on Tuesday that is forecast to show activity accelerated slightly in October.

"We might see gold hitting the $1,400 level over the next year, given the (positive) growth outlook that is being suggested by the recent economic data," CMC Markets' McCarthy said.

However, data on Monday showed new orders for U.S.-made goods fell more than expected in September and business spending on equipment was slightly weaker than initially thought, suggesting that manufacturing remains soft amid the trade war between the world's two biggest economies.

Among other metals, silver was flat at $18.06 per ounce and platinum rose 0.3% to $937.97 per ounce, having fallen more than 1% in the previous session.

Palladium was up 0.1% at $1,781.19 an ounce, after falling 1.5% in the previous session. (Reporting by Diptendu Lahiri in Bengaluru; Editing by Aditya Soni)