* SPDR Gold Trust holdings at highest since November 2016
* Silver scales three-year peak
* Gold's downside limited in short-term: analyst
(Updates prices)
By Harshith Aranya
Sept 4 (Reuters) - Gold dipped on Wednesday as investors
booked profits after a 1% jump in the previous session and as
political risks in Europe and Asia receded, but concerns over
the global economy and the China-U.S. trade war kept bullion
close to a six-year peak.
Spot gold XAU= fell 0.6% to $1,537.22 per ounce at 1215
GMT, but hovered near last week's $1,554.56, its highest since
April 2013.
U.S. gold futures GCcv1 were down 0.7% at $1,545.70.
"The market is struggling to go above the $1,550 level and
that's triggering some profit taking... The Hong Kong situation
is an encouraging sign and equities market more broadly have
risen and that was a drag on gold, but fundamentally (gold) is
still at a very strong level," Capital Economics analyst Ross
Strachan said.
"Gold's downside is limited in the short term because of the
political uncertainties, particularly on the trade war front,
and also the large volume of negative yielding government debts,
making gold relatively attractive."
Risk appetite returned to global financial markets as
worries about political risks in Europe faded and China had
upbeat economic data. Additional relief came from reports that
Hong Kong will withdraw an extradition bill that triggered
months of unrest. MKTS/GLOB
In Britain, lawmakers will seek to pass a law forcing Prime
Minister Boris Johnson to ask the European Union to delay Brexit
until Jan. 31 unless there is an exit deal approved by
parliament beforehand. On the trade front, U.S. President Donald Trump threatened
on Tuesday that he would be "tougher" on Beijing in a second
term as president if talks dragged on. With no agreement on the dispute, investors remain nervous,
said Michael McCarthy, chief market strategist at CMC Markets.
Meanwhile, traders have fully priced in a 25 basis point
interest rate cut at the U.S. Federal Reserve's meeting later
this month, according to CME's FedWatch tool. FEDWATCH
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion and weigh on the dollar. The dollar .DXY
fell against a basket of currencies. USD/
Indicative of sentiment, holdings of SPDR Gold Trust GLD ,
the world's largest gold-backed exchange-traded fund, rose to
890.04 tonnes on Tuesday, their highest since November 2016.
Spot silver XAG= was up 0.5% at $19.32 per ounce, after
hitting $19.57 earlier, its highest since September 2016.
Elsewhere, spot platinum XPT= rose 1.8% to $974.58 per
ounce and palladium XPD= was down 0.1% at $,541.08.