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Gold down more than 4% this week

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Silver, platinum, palladium also head for weekly fall

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Wall Street's main indexes opened higher

(Adds comments, updates for AMERS morning session)

By Sarah Qureshi

May 16 (Reuters) - Gold prices dropped more than 2% on

Friday and were set for their worst week since November, as

increased risk appetite from the U.S.-China trade agreement

weighed on the market.

Spot gold fell 1.7% to $3,185.87 an ounce as of 1007

ET (14:07 GMT) and was down 4.2% so far this week. Last month,

prices had reached a record high of $3,500.05 amid escalated

tariff tensions.

U.S. gold futures was down 1.2% to $3,188.70.

"The thawing of the U.S.-China trade war has revived risk

appetite across the broader marketplace. This shift is prompting

profit-taking among futures traders, particularly in the gold

market, and has triggered a week-long wave of liquidation," said

Jim Wycoff, senior analyst at Kitco Metals.

Washington and Beijing earlier this week announced a 90-day

pause, while they work out the details to end their tit-for-tat

trade war. Later, the U.S. said that it was slashing "de

minimis" fees on smaller shipments from China.

As a result, the Wall Street's three main indexes opened

higher on Friday, building on this week's gains, after a long

period of uncertainty.

Bullion is considered a hedge against economic and

geopolitical turmoil. It also tends to do well in a low-interest

rate environment.

Meanwhile, recent slowing inflation data, combined with a

weaker-than-expected economic data, in the United States

cemented bets of more Federal Reserve rate cuts this year.

Markets expect the U.S. central bank to implement two rate

cuts, beginning in September.

Spot silver lost 1.3% to $32.27 an ounce and fell

over 1% for the week.

"It seems to me that if gold resumed its bull market run,

then silver has a more upside price potential too," said Wycoff.

Meanwhile, platinum dipped 0.6% to $983.56 and

palladium eased 0.3% to $965.46. Both the sister metals

also headed for weekly declines.