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* Fed says will be patient on further rate hikes
* SPDR Gold holdings up 4.6 pct this month
* Markets also eye U.S.-China trade talks (Recasts, updates prices, market activity and comments)
By Arijit Bose and Sumita Layek
Jan 30 (Reuters) - Gold rose to its highest level in over eight months on Wednesday as the dollar dipped after the U.S. Federal Reserve held interest rates steady and said it would be patient with future interest rate hikes.
Spot gold XAU= was up 0.6 percent at $1,319.15 per ounce at 4:05 p.m. EST (2105 GMT). The session high of $1,323.24 was the highest since May 11, 2018.
U.S. gold futures GCcv1 settled up 0.1 percent to $1,309.90.
The Fed held U.S. interest rates steady on Wednesday but said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty about the economic outlook. fact that (Fed Chairman Jerome) Powell said there is no hurry to raise interest rates is very bullish for gold ... It pretty much took the March rate hike off the table," said Bob Haberkorn, senior market strategist at RJO Futures.
"Gold has not been able to rally because the Fed was very hawkish and aggressive in rate hikes, now that it is off the table, we will probably see the top lifted of gold here and see it trade higher in 2019."
The dollar .DXY fell after the Fed held interest rates steady and struck a cautious tone on its outlook for the economy and future interest rate increases. USD/
Earlier in the session, the greenback gained after payrolls processor ADP (NASDAQ:ADP) reported that the U.S. private sector had added 213,000 jobs in January, beating forecasts for 178,000 new jobs. the dollar continues to benefit from safe-haven flows, buying sentiment (for the currency) is seen taking a hit if the Fed sounds more dovish than expected," Lukman Otunuga, Research Analyst at FXTM said in a note.
Last year, the dollar overtook gold to emerge as investors' favoured hedge against global economic and political uncertainty, but analysts have said gold is likely to be the preferred safe haven this year.
Overall risk sentiment is also being tested by concerns that Washington's pursual of a criminal case against Chinese company Huawei and its chief financial officer could hurt trade talks between the world's two biggest economies. and China opened a pivotal round of high-level talks on Wednesday aimed at digging out from their months-long trade war amid deep differences over Chinese practices over intellectual property and technology transfer. investor interest in gold, holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose 1 percent to 823.87 tonnes on Tuesday, their highest since June. GOL/ETF
SPDR gold holdings have climbed 4.6 percent so far this month, the biggest monthly gain since September 2017.
Silver XAG= gained 1.4 percent to $16.06 per ounce. Its session high of $16.10 was the highest since July 2018.
Palladium XPD= rose 1 percent to $1,359, while platinum XPT= was up 0.6 percent at $814.50.
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