* Dollar rises to 2-1/2-month high
* SPDR Gold Trust holdings rise to highest in 2 months
* Silver eases to lowest in nearly 3 weeks (Updates prices, adds comment)
By Karthika Suresh Namboothiri
BENGALURU, Oct 30 (Reuters) - Gold prices fell on Tuesday as concerns about a further escalation of the U.S.-China trade war boosted the U.S. dollar, eroding bullion's appeal as it tested a key technical support.
Spot gold XAU= was down 0.5 percent at $1,23.81 per ounce at 13:35 p.m. EDT (1735 GMT), having touched $1,219.37, its lowest since Oct. 18. U.S. gold futures GCcv1 settled down $2.30, or 0.19 percent, at $1,225.3
The dollar climbed to a 2-1/2-month high, supported by worries about an escalation of the U.S.-China trade war. USD/
"Gold is not behaving as a safe-haven amidst news of the tariffs," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
"As long as the dollar continues to stay up at these levels or go higher, gold will be under pressure," Pehowich said, adding he expects the metal to stay in the range of $1,215 to $1,235 until the U.S. mid-term elections.
The midterm elections, on Nov. 6, will determine whether the Republican or Democratic party controls the U.S. Congress.
Gold prices have slipped around 10 percent from their April peak as investors turned to the dollar as a safe-haven as the trade war unfolded against a backdrop of higher U.S. interest rates.
A firmer dollar makes gold more expensive for holders of other currencies.
On the technical front, gold was testing support at the 100-day moving average around $1,220.
"If we drop back below the 100-day moving average, speculators could be inclined to add short positions again after they slashed them massively over the last 2-3 trading weeks," Commerzbank (DE:CBKG) analyst Carsten Fritsch said. CFTC/
Gold prices, which have risen 2.8 percent this month, were on track to break a six-month losing streak, the longest since a downturn from August 1996 through January 1997.
"Market focus will shift to the U.S. non-farm payrolls data release on Friday ... Stronger-than-expected data could stall gold's upward momentum," Standard Chartered (LON:STAN) analysts wrote in a note on Tuesday.
"However, equity markets are playing a more dominant role in setting the tone of trading for gold in the near term, in our view."
Volatile stock markets and covering of short positions by speculators, after they piled up record net shorts on COMEX gold, have helped gold recover from more than 1-1/2-year lows touched in mid-August at $1,159.96.
Investors' inclination toward gold can be seen in the holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust GLD , which rose to their highest in two months, at 24.27 million ounces, on Monday. GOL/ETF
In other precious metals, silver XAG= edged 0.3 percent lower to $14.44 per ounce, after slipping to a near three-week low of $14.33.
Platinum XPT= gained 0.3 percent to $834.80, and palladium XPD= fell 1.7 percent to $1,069.80.