PRECIOUS-Gold climbs toward 2019 highs on expectation of Fed rate cut

* Gold has risen about $60/oz in one week
* Inactive gold players getting involved again - UBS

(Updates prices)
By Arijit Bose
June 6 (Reuters) - Gold rose on Thursday, drawing closer to
its 2019 peak on increased expectations of a U.S. interest rate
cut, even as some investors locked in profits from bullion's
recent rally.
Spot gold XAU= rose 0.6% to $1,338.00 per ounce at 1615
GMT, while U.S. gold futures GCv1 gained 0.7% to $1,342.50 per
ounce.
"Gold's strength is most certainly based on the prompt
change in the market outlook on how aggressively the Fed will
cut rates over the coming months," Saxo Bank commodity
strategist Ole Hansen said.
Having suspended a three-year monetary tightening campaign
earlier this year, the U.S. Federal Reserve is widely expected
now to cut rates. Chairman Jerome Powell said the central bank will closely
monitor the economic impact of trade conflicts.
Gold has risen about $60 an ounce in one week, climbing on
Wednesday to within a few dollars of its 2019 high, set in
February, of $1,346.73. It later reversed course.
"It seems like some profit-taking has emerged since then.
Also, gold has run a long way in its rally in a short span of
time, so I would not be surprised to see it consolidate," Hansen
said.
Meanwhile, U.S. President Donald Trump threatened to hit
China with tariffs on "at least" another $300 billion of Chinese
goods, but said he thought China and Mexico wanted to make trade
deals with the United States. "Investor indifference towards gold is seemingly thawing,
with market participants that have been inactive for some (time)
starting to get involved again," UBS analysts said in a note.
"We think continuing trade tensions are likely to keep
markets uneasy, and therefore keep gold supported."
Among other precious metals, silver XAG= rose 0.6% to
$14.89 per ounce, close to a more than one-month high of $15.04
set in the previous session.
The end of the Fed tightening cycle and possible rate cuts
are silver-positive as well, HSBC analyst James Steel said in a
note.
"Greater financial market volatility or an increase in trade
or geopolitical risks may stoke safe-haven demand, especially if
gold is also rallying."
Palladium XPD= rose 1.2% to $1,344.70 per ounce an ounce,
while platinum XPT= edged up 0.5% to $802.87 per ounce, having
hit a near three-week high at $832.63 on Wednesday.