PRECIOUS-Gold near 1-week low as dollar, bonds emerge as preferred safe haven bets

* SPDR Gold holdings rise 0.5% on Wednesday
* Platinum touches over 3-month low
* Dollar scales one-week peak

(Updates prices)
By Brijesh Patel
May 30 (Reuters) - Gold prices inched up on Thursday, having
hit a one-week low earlier in the session as investors opted for
dollars and U.S. government bonds as a hedge against trade
tensions between the United States and China.
Spot gold XAU= was up 0.2% at $1,281.58 per ounce by 1307
GMT, having fallen to its lowest level since May 23 at $1,274.44
earlier in the session. U.S. gold futures GCcv1 edged 0.1%
lower to $1,285.70 an ounce.
"A strong U.S. dollar is weighing on the gold prices. The
dollar has been strong lately; it seems like investors prefer to
hold U.S. debts and other low risk serving bonds as opposed to
gold," SP Angel analyst Sergey Raevskiy said.
"However, gold is still very supported around these prices.
You would expect gold to be higher in this environment, but for
now, it looks like the investors' focus is elsewhere."
Gold turned slightly positive after data showed U.S.
first-quarter gross domestic product (GDP) increased at a 3.1%
annualized rate, slightly down from the 3.2% pace estimated last
month. The dollar index .DXY earlier climbed to a one-week peak
and hovered within striking distance of a two-year high of
98.371 hit a week ago, as Sino-U.S. trade tensions prompted
investors to seek refuge in the greenback and government bonds.
USD/
The dollar has been used as the preferred hedge against
trade tensions, repeating a trend seen last year and making gold
more expensive for holders of other currencies.
The dollar is also benefiting from increased demand for
bonds since the currency is needed to buy bonds, eroding
bullion's appeal.
Ramping up the rhetoric against the United States, a senior
Chinese diplomat on Thursday said deliberately provoking trade
disputes is "naked economic terrorism, economic chauvinism,
economic bullying." China's Communist Party newspaper had warned that Beijing
was ready to use rare earths to strike back at the United
States. The latest exchanges between Beijing and Washington
signalled the heightened risk of a prolonged trade war and have
tempered investors' enthusiasm towards riskier assets.
MKTS/GLOB
"With bond yields so low and weakening equity markets, gold
could find support. As (long) as the price remains above
$1,265-$1,270, gold will rally back to $1,306 and $1,316
levels," said Nicholas Frappell, global general manager at ABC
Bullion.
Meanwhile, holdings of SPDR Gold Trust GLD , the world's
largest gold-backed exchange-traded fund, rose 0.5% to 740.86
tonnes on Wednesday. GOL/ETF
Despite Wednesday's rise, SPDR gold holdings have fallen
more than 6% so far this year.
Among other precious metals, silver XAG= rose 0.3% to
$14.46 per ounce. The metal had dropped to $14.25 on Tuesday,
its lowest level since early December.
Platinum XPT= was steady at $791.16 per ounce, after
earlier falling to its lowest since Feb. 15 at $785. Palladium
XPD= slipped 0.1% to $1,347.85 per ounce.