Adds comments, updates for mid-session trading

By Anmol Choubey

April 25 (Reuters) - Gold prices steadied on Friday, on track for a third weekly gain, as investors maintained a bullish outlook while closely monitoring developments in the U.S.-China trade negotiations.

Spot gold XAU= was steady at $3,348 an ounce as of 0250 GMT. U.S. gold futures GCcv1 gained 0.3% to $3,359.

"While crowded positioning in gold may warrant a short-term pause, the pullback has so far been limited, as investors continue to view gold as a compelling hedge amid ongoing uncertainty," said IG market strategist Yeap Jun Rong.

U.S. President Donald Trump asserted on Thursday that trade talks between the U.S. and China are underway, pushing back against Chinese claims that no discussions have taken place to ease the ongoing trade war.

Meanwhile, a spokesperson for China's commerce ministry stated that if the U.S. "truly" wants to resolve the trade dispute, it should lift all unilateral tariff measures against China.

Non-yielding bullion, often viewed as a safeguard against global instability and which thrives in low-interest rate environments, has surged over $700 this year, setting multiple record highs. It reached $3,500.05 on Tuesday.

"Over the longer term, structural tailwinds remain intact, with further room for reserve diversification among emerging markets as they gradually align with the reserve composition of advanced economies," Rong said.

Fed officials indicated they saw no urgency in revising the monetary policy as they sought more information to determine how the Trump administration's tariffs were affecting the economy.

Traders currently see around 84 basis points worth of rate cuts by 2025-end. FEDWATCH

On the geopolitical front, Trump rebuked Russian President Vladimir Putin after a Russian missile and drone attack on Ukraine's capital Kyiv, the biggest this year, resulted in at least 12 deaths.

Among other metals, spot silver XAG= fell 0.5% to $33.42 an ounce, platinum XPT= edged down 0.1% at $969.65 and palladium XPD= fell 1.2% to $943.24.

(Reporting by Anmol Choubey and Anushree Mukherjee in Bengaluru; Editing by Sumana Nandy and Janane Venkatraman)

((anushree.ashishMukherjee@thomsonreuters.com;))