PRECIOUS-Gold draws support from U.S.-China trade, global downturn fears

* U.S. Treasury yields dip to lowest since September 2017
* Dollar near one-week high
* Platinum drops to more than three-month low
* Silver edges up from nearly six-month lows

(Updates prices)
By Swati Verma
May 29 (Reuters) - Gold prices rose alongside other
safe-haven assets on Wednesday as the trade rift between the
United States and China showed no sign of cooling, with
investors fearing a global economic slowdown.
Spot gold XAU= rose 0.2% to $1,281.30 per ounce by 1:54
p.m. EDT (1754 GMT) and U.S. gold futures GCcv1 settled up
0.3% at $1,281.
"It is not just the trade war but the status of U.S.,
Chinese and the European economies and Brexit hanging around
there. In this kind of environment, investors and corporations
are not quite sure how to play this market," said Jeffrey
Christian, managing partner of CPM Group.
"Investors are confused whether to go long stocks or short
stocks; long bonds or short bonds. So, they are siding with the
precious metals. We have also seen a decline in the U.S. stock
markets for the past couple of days."
Risk aversion has increased globally in recent days as fears
of world recession resurfaced amid disappointing macro data in
major economies.
Equity markets sank worldwide and U.S. Treasury yields
dipped to 20-month lows as investor sentiment soured over
growing global growth worries. MKTS/GLOB US/
Fuelling tensions between Beijing and Washington, Chinese
newspapers warned on Wednesday that Beijing was ready to use
rare earth metals to strike back at the United States in their
prolonged dispute. This comes two days after U.S. President Donald Trump said
Washington was not yet prepared to strike a deal.
"Gold rises on trade angst but remains the least preferred
safe-haven as investors flee to bonds. The yellow metal has
delivered limited gains on growing recessionary concerns, but
that could change on the break of $1,300 an ounce," OANDA senior
market analyst Edward Moya said in a note.
"The dollar's run will also hamper gold, but we could see
that coming to an end, or at least a break, when the Federal
Reserve admits the recent dip with inflation was not transitory.
Rate cuts are priced in by the financial markets, the Fed just
needs to capitulate."
Lower U.S. interest rates put pressure on the dollar and
bond yields, increasing the appeal of non-yielding bullion.
The dollar index .DXY , which has been competing with
bullion as the investment of choice to hedge against the trade
tensions, held near a one-week high. USD/
Among other precious metals, silver XAG= gained 0.7% to
$14.44 per ounce. The metal had fallen to $14.25 in the last
session, its lowest since early December.
Platinum XPT= fell 0.3% to $793.09 per ounce, after
earlier falling to its lowest since Feb. 15 at $787. Palladium
XPD= jumped 1.1% to $1,350.52 per ounce.