PRECIOUS-Gold prices hit over 6-month low amid U.S. rate hike prospects

    * World stocks extend sell-off on trade tensions
    * Palladium off two-month lows of $936/oz

 (Adds comment and updates prices)
    By Karen Rodrigues
    BENGALURU, June 26 (Reuters) - Gold prices fell to a more
than six-month low on Tuesday, pressured by prospects of rising
U.S. interest rates amid a strengthening economy. 
    Spot gold        was down 0.3 percent at $1,260.72 an ounce,
as of 0800 GMT, after touching its weakest since Dec. 18, 2017
at $1,257.74 earlier in the session.  
    U.S. gold futures         for August delivery were 0.5
percent lower at $1,262.40 per ounce.
    "Rising trade tensions should have (but did not) help gold's
cause all that much. Instead, it seems that the concern of
rising interest rates, particularly in the U.S., continues to
gnaw away at gold, as does the fact that the fund length is
fleeing," INTL FCStone analyst Edward Meir said in a note.
    U.S. Fed Chairman Jerome Powell last week said the central
bank should continue with a gradual pace of interest rate rises
amid a strong economy to balance its employment and inflation
    Gold, which is highly sensitive to rising U.S. interest
rates, could see demand take a hit from higher rates, as these
tend to boost the dollar and push bond yields up.
    "Trade tensions aren't helping gold at all, there is only
one clear trend which is skewed to the downside. By looking at
the chart, it appears that bulls have left the town," said
ThinkMarkets chief market analyst Naeem Aslam.
    World stocks extended a sell-off on Tuesday as escalating
trade tussles between the United States and other major
economies steered investors away from riskier assets, with
markets in China bearing the brunt of investor anxiety.
    U.S. Treasury Secretary Steven Mnuchin said that forthcoming
investment restrictions from the department will not be specific
to China but would apply "to all countries that are trying to
steal our technology."              
    Gold, usually seen as a safe store of value during economic
and political uncertainty, has found only limited support from
the ongoing global trade spat.
    "The market certainly looks susceptible to some further
declines until data shows any sort of weakness in the U.S.
economy in particular," said ANZ analyst Daniel Hynes.
    Gold-backed exchange-traded funds tracked by Thomson Reuters
were headed for their weakest month since July 2017, as
investors covered losses in equities, commodities and other
markets caused by tariff disputes.             
    In other precious metals, silver        was down 0.4 percent
at $16.24 an ounce.
    Platinum        fell 0.7 percent to $858.22 an ounce.
    Palladium        was 0.1 percent lower at $938.51 per ounce.
It touched a more than two-month low at $936 an ounce in the
previous session.

 (Reporting by Karen Rodrigues in Bengaluru; Editing by Amrutha
Gayathri and Subhranshu Sahu)