PRECIOUS-Gold gains as Fed rate cut expectations provide support

* SPDR Gold holdings rise 0.5% on Wednesday
* Palladium hits over six-week high, up for 6th straight
session
* Fed to meet next week; markets pricing in rate cuts in
2019

(Adds quote, updates prices)
By Eileen Soreng
June 13 (Reuters) - Gold prices climbed to a week's high on
Thursday, supported by expectations for an interest rate cut by
the U.S. Federal Reserve following soft inflation data, although
an uptick in equities capped gains.
Spot gold XAU= rose 0.5% to $1,340.13 per ounce as of 1:32
p.m. EDT (1732 GMT), after touching its highest since June 7 at
$1,344.60 earlier in the session.
U.S. gold futures GCv1 settled up 0.5% at $1,343.70 an
ounce.
"The initial move on higher prices was due to escalating
trade tensions ... Thereafter, concerns around recession or a
slowing U.S. economy has helped push up rising expectations of a
Fed interest rate cut in July," said Suki Cooper, precious
metals analyst at Standard Chartered Bank.
Lower interest rates decrease the opportunity cost of
holding non-yielding bullion and weigh on the dollar, making
gold cheaper for investors holding other currencies.
Fed policymakers are scheduled to meet on June 18-19, with
financial markets pricing in at least two rate cuts by year-end,
after tepid consumer price data on Wednesday and employment data
were seen as further indications the U.S. economy may be losing
steam. "It (gold) found strong support around $1,320 earlier this
week and has since burst higher with the previous peak around
$1,350 in its view. A break of this could propel gold higher,
although it will have to be matched with momentum," Craig Erlam,
senior market analyst with OANDA, said in a note.
"Risk appetite in the markets is likely to work against
gold, but the dollar looking vulnerable is clearly supportive,"
he wrote.
Wall Street stocks opened higher on Thursday, helped by
gains in energy shares after suspected attacks on two tankers
off the coast of Iran boosted oil prices. .N O/R
Holdings of SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, rose 0.5% to 759.70 tonnes on
Wednesday from 756.18 tonnes on Tuesday. GOL/ETF
Silver XAG= climbed 1.1% to $14.90 per ounce while
platinum XPT= dipped 0.3% to $806.07.
Palladium XPD= jumped 2.6% to $1,442.51 per ounce after
hitting a more than six-week high of $1,447.26 earlier in the
session.
"Even though auto sales globally are slowing, we are seeing
palladium demand rise amid tighter emission regulations around
the world," said Standard Chartered's Cooper.