* Weaker Chinese trade data pulls down Asia stocks
* Spot gold looks neutral in $1,279-$1,299 range -technicals
* Palladium below record highs hit last week (Adds comment, updates prices)
BENGALURU, Jan 14 (Reuters) - Gold prices rose on Monday asthe dollar fell on expectations that the U.S. Federal Reservewill not raise rates this year and as Asian markets droppedafter lacklustre China data reflected a slowdown in the world'ssecond-largest economy.
Gold tends to gain on expectations of lower interest rates,as they reduce the opportunity cost of holding a non-yieldingbullion and trims the demand for U.S. dollar, making the yellowmetal less expensive for holders in other currencies.
Spot gold XAU= was up 0.3 percent at $1,291.42 per ounce,as of 0411 GMT.
U.S. gold futures GCv1 were up 0.2 percent at $1,291.40per ounce.
The weakness in equities and U.S. dollar appear to be abonding providing support for gold, said Michael McCarthy, chiefstrategist, CMC Markets and Stockbroking.
"There is a key resistance between $1,290 and $1,310. Goldwill need to do substantial work to rise above this level asgenerally we see traders shorting into it."
The U.S. central bank had the ability to be patient onmonetary policy given stable price measures, U.S. FederalReserve Chairman Jerome Powell said last week, and he downplayedpredictions from policymakers suggesting interest rates would beraised twice more this year. urn:newsml:reuters.com:*:nW1N1YP03Y
"The market feels there is a shift in the Fed's stance andit is more accommodative and we are seeing the dollar weakeningfor several sessions," McCarthy said.
Meanwhile, Asian shares tumbled on Monday after a shockcontraction in Chinese December exports, which fell 4.4 percentfrom a year earlier, the biggest monthly drop in two years,official data showed on Monday. urn:newsml:reuters.com:*:nZZN07HC01
Spot gold has gained over 11 percent since hitting a1-1/2-year low in mid-August at $1,159.96 due to volatile stockmarkets and a weaker dollar.
"The precious metals sectors continues to benefit from aweaker U.S. dollar and periodic weakness in equity markets," ANZsaid in a research note.
"The geopolitical risks have also started to induce somesafe-haven buying. Investors are becoming increasingly worriedabout the Brexit negotiations. At the same time, there appearsno end in sight for the U.S. government shutdown," ANZ notedadded.
A partial U.S. government shutdown over President DonaldTrump's demand for $5.7 billion to build a wall along theU.S.-Mexico border entered its 24th day on Monday, with no endin sight. urn:newsml:reuters.com:*:nL1N1ZC06F
Spot gold remains neutral in a range of $1,279-$1,299 perounce, and an escape could suggest a direction, according toReuters technical analyst Wang Tao. urn:newsml:reuters.com:*:nL3N1ZE1E9
Among other precious metals, palladium XPD= fell 0.6percent to $1,310.45 an ounce. It hit a record high at $1,342.43last week.
Platinum XPT= slipped 0.5 percent to $806.24; while silver XAG= inched down 0.1 percent to $15.58 an ounce. (Reporting by Nallur Sethuraman in Bengaluru, Editing by SherryJacob-Phillips) ((Sethuraman.NR@thomsonreuters.com; (Within U.S.1-651-848-5832, Outside U.S. +91 8067496031); Reuters Messaging:email@example.com))