The evolution of an interacting two-component Bose-Einstein condensate from an initial phase state leads to a spin squeezed state that may be used in atomic clocks to increase the signal-to-noise ratio, opening the way to quantum metrology. The efficiency of spin squeezing is limited by the finite temperature of the gas, as was shown theoretically in a spatially homogeneous system. Here we determine the limit of spin squeezing in the realistic trapped case, with classical field simulations, and with a completely analytical treatment that includes the quantum case.