* U.S. consumer price index rises 0.1% in May
* SPDR Gold holdings down 0.03% to 756.18 tonnes Tuesday
* GRAPHIC - 2019 asset returns: tmsnrt.rs/2jvdmXl (Adds U.S. data, quote, updates prices)
By Eileen Soreng
June 12 (Reuters) - Gold prices gained on Wednesday after hitting a one-week low in the previous session, as fears of escalating U.S.-China trade tensions curbed risk appetite and increased the appeal of safe-haven bullion.
Spot gold was up 0.6% at $1,333.93 per ounce at 1302 GMT, its biggest one-day percentage gain since June 3, after falling as low as $1,319.35 on Tuesday. U.S. gold futures were 0.5% higher at $1,337.5 an ounce.
“There seems to be some risk-off sentiment in the market... We’ve now seen prices move up on the back of concerns around (U.S.-China) trade and we think that will continue to underpin a strong performance in gold,” said Capital Economics analyst Ross Strachan.
World share markets snapped a seven-day winning streak on Wednesday after the United States toughened its stance on trade with China.
U.S. President Donald Trump defended the use of tariffs as part of his trade strategy, while China vowed a tough response if Washington insists on escalating trade conflict amid ongoing negotiations.
Trump also emphasised he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees again to four or five “major points”, which he did not specify.
Trump is expected to meet Chinese President Xi Jinping at the G20 summit in Japan later this month.
Meanwhile, data from the U.S. Labor Department showed consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy could increase pressure on the Federal Reserve to cut interest rates this year.
Fed policymakers will meet on June 18-19. A Fed watch tool by CME assigns a 18% probability of a U.S. rate cut next week and a 68% probability of a cut in July.
The dollar hovered near the 2-1/2 month low touched last week on growing expectations of a rate cut next week and trade concerns, supporting gold prices further.
“The gold bulls have the overall near-term technical advantage and regained momentum today,” Jim Wyckoff, senior analyst at Kitco said in a note, adding the next upside price target would be a close in August futures above June’s $1,352.70 high.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell marginally to 756.18 tonnes on Tuesday from 756.42 tonnes on Monday.
Among other metals, silver climbed 0.7% to $14.80 per ounce, while platinum was little changed at $812.65 per ounce.
Palladium was up 0.1% at $1,395.61 per ounce, after touching a more than six-week high of $1,400.50 in the previous session. (Reporting by Eileen Soreng and Arijit Bose in Bengaluru Editing by Emelia Sithole-Matarise/Mark Heinrich/ Kirsten Donovan)