* Palladium off 6-week high
* U.S. CPI data for May due at 1230 GMT
* GRAPHIC - 2019 asset returns: tmsnrt.rs/2jvdmXl (Updates prices)
By Arijit Bose
June 12 (Reuters) - Gold prices rose on Wednesday after hitting a one-week low in the previous session, as worries over U.S.-China trade war flared up, curbing risk appetite and increasing the appeal of safe-haven bullion.
Spot gold was up 0.7% at $1,335.34, as of 0724 GMT, after falling to its lowest since June 3 at $1,319.35 in the previous session.
U.S. gold futures were up 0.6% at $1,339 an ounce.
“Market sentiment this morning is very cautious and risk appetite has started to diminish gently, therefore we see a little bit of buying in gold,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.
Asian stock markets drifted lower as both warring factions in the Sino-U.S. trade tussle engaged in another round of heated exchanges.
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 tensions amid ongoing negotiations.
Trump also emphasised that 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.
“Gold remains bid as the main dispute between U.S. and China remains unresolved. If there is no sit down between leaders at the G20 meeting, the metal will rise as investors will be on the lookout for a safe haven,” Alfonso Esparza, a senior market analyst at OANDA, said in a note.
Sources said there has been a lack of preparatory work for the meeting, due largely to the increasing acrimony. The trade negotiating teams have not met since talks ended in stalemate on May 10.
Gold bulls are also optimistic of an interest rate cut by the U.S. Federal Reserve. Trump, a long-term advocator of rate cuts, said on Tuesday interest rates were “way too high” and the central bank had “no clue”.
Fed policymakers will meet on June 18-19 against the backdrop of rising trade tensions, slowing U.S. growth and a sharp step-down in hiring last month that have led markets to price in at least two rate cuts by the end of 2019.
Also in focus are the May U.S. consumer price data, due at 1230 GMT. Headline inflation is expected to slow a touch to 1.9%, with core seen steady at 2.1%.
Last week, gold registered its biggest weekly gain of 2019 and rose to a 14-month peak of $1,348.08, before losing momentum due to a deal between the United States and Mexico to avert yet another trade spat.
Capping gains, this rally in gold prices offered an opportunity for some traders to book profits, Lu added.
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 rose 1% to $14.85 per ounce, while platinum climbed 0.7% to $817.80 per ounce.
Palladium fell 0.3% to $1,389.75 per ounce, off a six-week high of $1,400.50 touched in the previous session. (Reporting by Arijit Bose in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu)