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PRECIOUS-Gold gains as Fed rate cut expectations provide support


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* SPDR Gold holdings rise 0.5% on Wednesday

* Palladium hits over six-week high, up for 6th straightsession

* Fed to meet next week; markets pricing in rate cuts in2019 (Adds quote, updates prices)

June 13 (Reuters) - Gold prices climbed to a week's high onThursday, supported by expectations for an interest rate cut bythe U.S. Federal Reserve following soft inflation data, althoughan uptick in equities capped gains.

Spot gold XAU= rose 0.5% to $1,340.13 per ounce as of 1:32p.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 anounce.

"The initial move on higher prices was due to escalatingtrade tensions ... Thereafter, concerns around recession or aslowing U.S. economy has helped push up rising expectations of aFed interest rate cut in July," said Suki Cooper, preciousmetals analyst at Standard Chartered Bank.

Lower interest rates decrease the opportunity cost ofholding non-yielding bullion and weigh on the dollar, makinggold cheaper for investors holding other currencies.

Fed policymakers are scheduled to meet on June 18-19, withfinancial markets pricing in at least two rate cuts by year-end,after tepid consumer price data on Wednesday and employment datawere seen as further indications the U.S. economy may be losingsteam. urn:newsml:reuters.com:*:nL2N23I1A9urn:newsml:reuters.com:*:nL2N23J12M

"It (gold) found strong support around $1,320 earlier thisweek 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 againstgold, but the dollar looking vulnerable is clearly supportive,"he wrote.

Wall Street stocks opened higher on Thursday, helped bygains in energy shares after suspected attacks on two tankersoff the coast of Iran boosted oil prices. .NO/R

Holdings of SPDR Gold TrustGLD , the world's largestgold-backed exchange-traded fund, rose 0.5% to 759.70 tonnes onWednesday from 756.18 tonnes on Tuesday. GOL/ETF

Silver XAG= climbed 1.1% to $14.90 per ounce whileplatinum XPT= dipped 0.3% to $806.07.

Palladium XPD= jumped 2.6% to $1,442.51 per ounce afterhitting a more than six-week high of $1,447.26 earlier in thesession.

"Even though auto sales globally are slowing, we are seeingpalladium demand rise amid tighter emission regulations aroundthe world," said Standard Chartered's Cooper. (Reporting by Eileen Soreng; additional reporting by KarthikaNamboothiri and Diti Pujara in Bengaluru; editing by Dan Greblerand G Crosse) ((eileen.soreng@thomsonreuters.com; +1-651-848-5832, outsideN.America, +91-80-6749-6131; Reuters Messaging:eileen.soreng.thomsonreuters.com@reuters.net))






This article appears in: Stocks , World Markets , Economy
Referenced Symbols: GLD ,



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