BENGALURU, June 12 (Reuters): Gold prices gained on Wednesday after hitting a one-week low in the previous session, as fears of escalating US-China trade tensions curbed risk appetite and increased the appeal of safe-haven bullion.
Spot gold was up 0.8per cent at $1,337.72 per ounce as of 0941 GMT, its biggest one-day per centage gain since June 3, after falling as low as $1,319.35 on Tuesday.
US gold futures were up 0.7per cent at $1,340.4 an ounce.
"There seems to be some risk-off sentiment in the market... We've now seen prices move up on the back of concerns around (US-China) trade and we think that will continue to underpin a strong performance in gold," said Capital Economics analyst Ross Strachan.
World share markets snapped a seven-day winning streak on Wednesday after the United States toughened its stance on trade with China.
US President Donald Trump defended the use of tariffs as part of his trade strategy, while China vowed a tough response if Washington insists on escalating trade tensions amid ongoing negotiations.
Trump also emphasised he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees again to four or five "major points", which he did not specify.
Trump is expected to meet Chinese President Xi Jinping at the G20 summit in Japan later this month.
Meanwhile, gold bulls are also optimistic of an interest rate cut by the US Federal Reserve.
Fed policymakers will meet on June 18-19 against the backdrop of rising trade tensions, slowing US growth and a sharp step-down in hiring last month that have led markets to price in at least two rate cuts by the end of 2019.
The dollar edged lower for a second consecutive day on growing expectations of a rate cut next week, supporting gold prices further.
"Technical traders are likely to closely monitor how prices behave above the $1,324 support level this week. Should this prove to be reliable support, the next key level of interest for gold could be found around $1,347," Lukman Otunuga, research analyst at FXTM, said in a note.
Also in focus is the May US consumer price data, due at 1230 GMT.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell marginally to 756.18 tonnes on Tuesday from 756.42 tonnes on Monday.
Among other metals, silver rose 0.5per cent to $14.78 per ounce, while platinum climbed 0.6per cent to $817.61 per ounce.
Palladium fell 0.1per cent to $1,392.90 per ounce, after touching a more than six-week high of $1,400.50 in the previous session.
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