By K. Sathya Narayanan
May 23 (Reuters) - Gold prices jumped 1 percent on Thursday as the U.S. dollar pulled back from a two-year peak scaled earlier in the session and as global equities slid on the escalating Sino-U.S. trade tensions.
Spot gold XAU= climbed 1 percent to $1,285.63 per ounce by 11:21 am EDT (1522 GMT), after falling to its lowest since May 3 on Tuesday at $1,268.97.
U.S. gold futures GCcv1 rose 0.9 percent to $1,285.50 an ounce.
"We have seen a sharp reversal in the dollar and that has helped buoy gold prices," said Suki Cooper, precious metals analyst at Standard Chartered Bank.
The dollar index .DXY, which earlier in the session touched its highest level in two years at 98.371, gave back some gains after the release of U.S. weekly jobless data. USD/
"After the U.S. Federal Reserve said it would remain patient the market has taken this as a positive cue and has started to price in the greater probability of a rate cut," Cooper added.
Lower interest rates tend to lift gold as it reduces the opportunity cost of holding the non-yielding bullion.
The Fed officials at their last meeting agreed that their current patient approach to setting monetary policy could remain in place "for some time," a further sign policymakers see little need to adjust rates.
"Yields are (also) a bit lower and equity markets are down (supporting gold)," said ABN AMRO analyst Georgette Boele.
World shares fell as concerns grew that the China-U.S. trade conflict was fast turning into a technology cold war between the world's two largest economies. MKTS/GLOB
China said the United States needs to correct its "wrong actions" for trade talks to continue after it blacklisted Chinese technology company Huawei Technologies Co Ltd.
U.S. 10-year Treasury yields US10YT=RR dropped to the lowest since December 2017 earlier in the session. US/
Among other precious metals, silver XAG= rose 1.2% to $14.62 per ounce, while palladium XPD= edged 0.2% higher to $1,316.80.
Platinum XPT= rose 0.2% to $800.52 an ounce, after touching the lowest since Feb. 15 at $791 earlier in the session.
(Reporting by K. Sathya Narayanan and Brijesh Patel in Bengaluru Editing by Chris Reese)
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