· Gold prices advanced on Thursday as demand for the safe-haven metal rose on expectations of an interest rate cut by the U.S. Federal Reserve following soft inflation data, and on escalating trade tensions between the world’s top two economies.

Spot gold was up 0.3% at $1,337.41 per ounce, as of 0706 GMT. U.S. gold futures were also 0.3% higher, at $1,341.40 an ounce.

· “We can see strong support at $1,330 for gold, and the metal looks to trade upside with expectations of lower interest rates,” said Peter Fung, head of dealing at Wing Fung Precious Metals.

“Also, we are still worried about the (U.S.-China) trade war and people are still looking at gold as a safe haven,” he said.

· Data from the Labor Department showed on Wednesday U.S. consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy increased pressure on the Federal Reserve to cut interest rates this year.

· Fed policymakers are scheduled to meet on June 18-19 against the backdrop of rising trade tensions, slowing growth and a sharp step-down in hiring in May which have led financial markets to price in at least two rate cuts by the end of 2019.

The dollar index versus a basket of six major currencies was down 0.1% on Thursday, having risen more than 0.3% overnight.

· On the trade front, U.S. President Donald Trump said he had a “feeling” a U.S.-China trade deal could be reached, but reiterated his threat of increasing tariffs on Chinese goods if there is no agreement.

However, Trump declined to set a deadline for levying tariffs on another $325 billion of Chinese goods and called the relationship with Beijing good but “testy” after China walked back commitments for a trade deal.

· Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.5% to 759.70 tonnes on Wednesday from 756.18 tonnes on Tuesday.

· On the technical side, spot gold is expected to retest a resistance at $1,339 per ounce, a break above which could lead to a gain to $1,346, according to Reuters technical analyst Wang Tao.

· Another billionaire investor is sounding the alarm for the U.S. and global economies and is looking at gold as the safe-haven play.

In an interview with Bloomberg News, Paul Tudor Jones, fund manager and create of Tudor Investment Corp., said that his favorite trade in the next 12 to 24 months is gold. He added that if the price can break through $1,400 it will push to $1,700 an ounce "rather quickly."

“[Gold] has everything going for it,” he said.

During the interview Jones said that the global economy, which has been built on global trade, is on the verge of breaking down as global trade tensions continue to escalate. He said that President Donald Trump’s recent threat of further tariffs on $300 billion of imported Chinese goods could be the “material event,” that could push the U.S. economy into a recession.

· With the Chinese media repeatedly flashing worrisome signals concerning its trade spat with the US, Gold prices rally to the day’s high near $1337 during early Thursday.

Among the key headlines that triggered risk aversion are the accusations that the US distorts the market economy and comments from Wu Xiaoqiu, vice president of the Renmin University of China that portrays diminishing chances of the US-China trade deal.

Technical Analysis

Unless clearing $1342, the yellow metal is less likely to aim for $1348 whereas $1320 holds the gate for a fresh downturn towards April high near $1310.

· Among other precious metals, silver rose 0.6% to $14.82 per ounce and platinum gained 0.6% to $813.30.

Palladium was up 0.4% at $1,411.90 an ounce after hitting a more than one-month high of $1,415.96 earlier in the session.

Reference: Reuters, Kitco, FX Street