PRECIOUS-Gold hits 3-month high on trade tensions, hopes for Fed rate cut

* Dollar struggles near seven-week low
* Powell: Fed will react "as appropriate" to trade war risks
* Silver hits one-month high, on track for 6th session of
gains
* Platinum hits near 3-week high

(updates prices)
By Arijit Bose
June 5 (Reuters) - Gold prices rose 1% to a more than
three-month high on Wednesday as trade tensions induced
safe-haven demand and increased bets on a cut in interest rates
by the U.S. Federal Reserve.
Spot gold XAU= gained 0.8% to $1,335.82 per ounce at 1144
GMT, having reached its highest since Feb. 21 at $1,340.08
earlier.
U.S. gold futures GCv1 gained 0.9% to $1,340.50 an ounce.
"A lot of the strength in gold is related to the trade war
tensions, which have been ratcheted up after Trump's tariff
threats on Mexico," said Philip Newman, a director at Metals
Focus.
As the United States' trade clash with China drags on, U.S.
President Donald Trump's tariff threat to Mexico added to
concerns, drawing investors to safe-haven assets such as gold.
"Earlier this year, when the trade war was paramount (news)
we saw dollar strength since investors thought that the main
casualties will be the emerging markets," Newman said.
"Now due to concerns about the global economy, people are
viewing that as maybe the next move could be a cut in U.S. rates
and that is undermining the dollar."
The U.S. dollar .DXY struggled near a seven-week low and
now seems to have lost its former appeal as a safe haven,
especially as the U.S. Fed reels under consistent pressure from
Trump, who has advocated for a rate cut. On Tuesday, Fed Chair Jerome Powell moved away from his
"patient" approach and instead acknowledged risks due to trade
conflicts, saying the central bank would respond "as
appropriate" to the same. Earlier this week, St. Louis Fed President James Bullard
said a rate cut "may be warranted soon". Lower interest rates would support non-yielding bullion.
Shortly after Powell's statement on Tuesday, data showed new
orders for U.S.-made goods fell in April and shipments dropped
by the most in two years, raising concerns that the U.S. economy
could fall prey to an elongated trade war. Gold prices have gained over $60 since Trump's tariff threat
on Mexico, with investors selling riskier assets.
The jump in gold prices also saw a 2.2% rise in the holdings
of SPDR Gold Trust GLD , the world's largest gold-backed
exchange-traded fund, on Monday. It was SPDR's biggest one-day
percentage gain since July 2016. GOL/ETF
Silver XAG= gained 0.3% to $14.86 per ounce, having
touched a one-month high of $14.90, on track for its sixth
consecutive session of gains.
Platinum XPT= rose 1.2% to $825.61 per ounce, having hit
$832.63 its highest since May 17, earlier in the session.
Palladium XPD= fell 0.3% to $1,342.85 per ounce.