PRECIOUS-Gold hits more than 3-month peak as bets on U.S. rate cut grow

* U.S. rate cut bets rise on trade stand-off, weak U.S. data
* GLD fund posts biggest 1-day percentage gain since
mid-2016
* Platinum hits two-week high

(Adds comment, updates prices)
By Diptendu Lahiri
June 4 (Reuters) - Gold hit a more than three-month high on
Tuesday as expectations rose that the U.S. Federal Reserve would
cut interest rates to offset the impact on growth of the
U.S.-China trade war, fuelling demand.
Lower interest rates cut the opportunity cost of holding
non-yielding commodities, while gold also tends to benefit from
growth concerns as an alternative to cyclical assets like
stocks.
Spot gold XAU= was 0.1% higher at $1,325.72 per ounce as
of 1018 GMT, after touching its highest since Feb. 27 at
$1,328.98 in the previous session.
U.S. gold futures GCcv1 were up 0.2% at $1,330.50 an
ounce.
"A surge in safe-haven demand has been observed over the
past few days because no-one expected the United States to open
a new trade war front with Mexico after China," said Jigar
Trivedi, a commodities analyst at Mumbai-based Anand Rathi
Shares & Stock Brokers.
"Safe-haven buying was also seen because manufacturing data
from China and the euro zone were seen as a cause of concern."
On Monday, Washington accused China of pursuing a "blame
game" in recent public statements and a weekend white paper that
it said misrepresented the trade negotiations between the two
economies. The prolonged trade war between the two countries has roiled
financial markets, denting risk sentiment among
investors. MKTS/GLOB Elsewhere data showed U.S. manufacturing growth slowed in
May to its weakest pace in more than 2-1/2 years, fuelling bets
that the Fed may cut rates by the end of this year. St. Louis Fed president James Bullard on Monday conceded
that risks to economic growth posed by trade tensions may
warrant a rate cut soon. The news prompted U.S. Treasury yields to slip to their
lowest since September 2017. US/
"The correction of the greenback has given a lift to bullion
while the decline of U.S. yields is another favourable element
for the precious metal," said ActivTrades analyst Carlo Alberto
De Casa in a note.
Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust GLD , rose 2.2% on Monday, their biggest
one-day percentage gain since July 2016. GOL/ETF
At these high price levels, "there will be some
profit-booking, but the tone (for gold) is positive until $1,300
on the downside is breached," Trivedi said.
Silver XAG= was down 0.3% at $14.73 per ounce, having
touched a more than two-week high of $14.83 on Monday.
Platinum XPT= edged 0.1% lower to $820.13 per ounce after
hitting a two-week high of $825.78, while palladium XPD= was
nearly steady at $1,324.76 per ounce.