June 6, 2019 / 4:38 PM / 10 days ago

PRECIOUS-Gold climbs toward 2019 highs on expectation of Fed rate cut

* Gold has risen about $60/oz in one week

* Inactive gold players getting involved again - UBS (Updates prices)

By Arijit Bose

June 6 (Reuters) - Gold rose on Thursday, drawing closer to its 2019 peak on increased expectations of a U.S. interest rate cut, even as some investors locked in profits from bullion’s recent rally.

Spot gold rose 0.6% to $1,338.00 per ounce at 1615 GMT, while U.S. gold futures gained 0.7% to $1,342.50 per ounce.

“Gold’s strength is most certainly based on the prompt change in the market outlook on how aggressively the Fed will cut rates over the coming months,” Saxo Bank commodity strategist Ole Hansen said.

Having suspended a three-year monetary tightening campaign earlier this year, the U.S. Federal Reserve is widely expected now to cut rates.

Chairman Jerome Powell said the central bank will closely monitor the economic impact of trade conflicts.

Gold has risen about $60 an ounce in one week, climbing on Wednesday to within a few dollars of its 2019 high, set in February, of $1,346.73. It later reversed course.

“It seems like some profit-taking has emerged since then. Also, gold has run a long way in its rally in a short span of time, so I would not be surprised to see it consolidate,” Hansen said.

Meanwhile, U.S. President Donald Trump threatened to hit China with tariffs on “at least” another $300 billion of Chinese goods, but said he thought China and Mexico wanted to make trade deals with the United States.

“Investor indifference towards gold is seemingly thawing, with market participants that have been inactive for some (time) starting to get involved again,” UBS analysts said in a note.

“We think continuing trade tensions are likely to keep markets uneasy, and therefore keep gold supported.”

Among other precious metals, silver rose 0.6% to $14.89 per ounce, close to a more than one-month high of $15.04 set in the previous session.

The end of the Fed tightening cycle and possible rate cuts are silver-positive as well, HSBC analyst James Steel said in a note.

“Greater financial market volatility or an increase in trade or geopolitical risks may stoke safe-haven demand, especially if gold is also rallying.”

Palladium rose 1.2% to $1,344.70 per ounce an ounce, while platinum edged up 0.5% to $802.87 per ounce, having hit a near three-week high at $832.63 on Wednesday. (Reporting by Arijit Bose in Bengaluru; Editing by Dale Hudson, Jan Harvey and Richard Chang)

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