PRECIOUS-Gold hits 2-month high as recession concerns burnish safe-haven appeal

* Speculators raise net longs in COMEX gold in week to May
28
* SPDR Gold holdings gain 0.3% on Friday to 743.21 T
* Investors raise bets on U.S. Federal Reserve rate cut

(Updates prices)
By Sethuraman N R
June 3 (Reuters) - Gold prices rose on Monday to their
highest in more than two months as heightened Sino-U.S. trade
tensions and Washington's threat of tariffs on Mexico stoked
worries of a global recession and drove investors to seek refuge
in safe-haven bullion.
Spot gold XAU= was up 0.7% at $1,314.11 per ounce at 0746
GMT, after touching its highest since March 27 at $1,314.33.
U.S. gold futures GCv1 rose 0.6% to $1,319.40 an ounce.
"We are seeing a lot of traditional safe-haven hedging ...
coming back to the fray," said Stephen Innes, managing partner,
SPI Asset Management.
"(Equity) markets seemed to be a little bit complacent. What
caught them off-guard was Trump doubled down, signalling that
(dealings between countries) on the trade war front is going to
be quite aggressive."
U.S. stock futures, Asian share markets and oil prices
slipped to multi-month lows on Monday amid the mounting trade
worries.
Tensions between the United States and China escalated
during the weekend as the two countries clashed over trade,
technology and security.
"(Gold) markets are underpositioned and that's why we are
seeing investors aggressively chasing prices. There are bets
getting placed on a more aggressive rate cut, another reason why
we are seeing prices moving higher," Innes said.
In a sign that Sino-U.S. frictions are putting a big strain
on the global economy, South Korea's exports fell 9.4 percent in
May, worse than a median forecast for a 5.6 percent decline,
official data showed on Saturday.
The gloomy outlook has prompted traders to increase bets
that the U.S. Federal Reserve will cut interest rates sooner
rather than later.
"Gold finally behaved like a safe haven last week, breaking
out higher after the trade war escalation led to a code red for
global growth," Edward Moya, senior market analyst at OANDA,
said in a note.
Gold prices surpassed the key $1,300 level for the first
time since April on Friday after being stuck in a nearly $20
range for weeks.
Hedge funds and money managers increased their net long
positions in COMEX gold in the week to May 28, data
showed.
Indicating improved investor interest in gold, holdings of
SPDR Gold Trust GLD , the world's largest gold-backed
exchange-traded fund, rose 0.32 percent to 743.21 tonnes on
Friday from Thursday. GOL/ETF
Spot gold may test a resistance at $1,315 per ounce, a break
above which could lead to a gain into the range of
$1,321-$1,330, according to Reuters technical analyst Wang Tao.

In other precious metals, silver XAG= edged up 0.3% to
$14.65 per ounce; platinum XPT= rose 1% to $799.28 per ounce,
after falling last week to its lowest level since Feb. 15 at
$784.42; and palladium XPD= rose 1% to $1,337.50 per ounce.

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