* U.S. and China agree to continue trade talks
* Silver falls over 0.6%, palladium gains about 2%
* Dollar index rises 0.4%(Updates prices)
By Sumita Layek and Arpan Varghese
Aug 13 (Reuters) - Gold fell as much as 2% in a reversalfrom six-year highs on Tuesday, after the United States said itwould delay tariffs on some Chinese products and on news thatboth sides agreed to continue trade talks.
Spot gold was down 0.7% at $1,501.22 per ounce at2:00 p.m. EDT (1800 GMT), having earlier hit its highest levelsince April 2013 at $1,534.31.
U.S. gold futures settled down 0.2% to $1,514.1 anounce.
The Office of the U.S. Trade Representative said the Trumpadministration will delay 10% tariffs on certain Chineseproducts, including laptops and cell phones, that had beenscheduled to start next month.
"A thawing, perhaps reconsideration of the new proposedtariffs has drained the heat from the (gold) rally for now,"said Tai Wong, head of base and precious metals derivativestrading at BMO.
"While this does not dramatically dim the overall positiveoutlook for gold, it will temper its momentum in the shortterm."
U.S. stocks turned positive and the dollar rose on the news,with further momentum also coming from news that both sides hadagreed to conduct phone calls on trade again in twoweeks.
"Gold will be trading in a defensive position until the nexttwo weeks; there will be some buying at the dips but theexplosive moves higher we've seen in the last two weeks is notexpected with the trade talks hanging over the market," said BobHaberkorn, senior market strategist at RJO Futures.
Gold's rise to over 6-year highs earlier in the day wastriggered by a rout in the Argentine peso and unrest in HongKong.
Market focus is now on the U.S. Federal Reserve's annualsymposium next week for clues on the future trajectory ofinterest rates. Traders see a 86.2% chance of a 25 basis-pointrate cut by the U.S. central bank this September.
Meanwhile, holdings in the world's largest gold-backedexchange-traded fund, SPDR Gold Trust, jumped 0.9% to847.77 tonnes on Monday.
Among other precious metals, silver fell 0.6% to$16.96 per ounce, while platinum was up 0.2% to $853.81.Palladium gained 1.9% at $1,454.03 an ounce.(Reporting by Sumita Layek and Arpan Varghese in Bengaluru;editing by Alistair Bell, Grant McCool and Richard Chang)