BENGALURU, June 18 (Reuters) - Gold prices inched higher early Monday after falling to a 5-1/2-month low in the previous session, as a trade dispute between the two largest world economies triggered safe-haven buying. FUNDAMENTALS * Spot gold had edged up 0.2 percent to $1,281.41 per ounce by 0045 GMT. It touched its weakest since late-December at $1,275.01 an ounce on Friday. * U.S. gold futures for August delivery were up 0.4 percent at $1,284.10 per ounce. * The dollar index , which measures the greenback against a basket of six major currencies, rose 0.1 percent to 94.895. * U.S. President Donald Trump said he was pushing ahead with hefty tariffs on $50 billion of Chinese imports on Friday, and the smouldering trade war between the world's two largest economies showed signs of igniting as Beijing immediately vowed to respond in kind. * China will impose additional 25 percent tariffs on 659 U.S. goods worth $50 billion in response to the U.S. announcement that it will levy tariffs on Chinese imports, the Chinese commerce ministry said. * South Korea and the United States are expected to announce the suspension of "large-scale" military drills this week, with the provision that they would restart if North Korea failed to keep its promise to denuclearise, news agency Yonhap said on Sunday. * Syrian state media, citing a military source, reported on Monday that U.S.-led coalition aircraft had bombed "one of our military positions" in eastern Syria, leading to deaths and injuries, but the U.S. military denied carrying out strikes in the area. * Dallas Federal Reserve Bank President Robert Kaplan on Friday said he would be open to raising the Fed's target policy rate a fourth time late this year, but his base case is for just three. * Speculators raised their net long positions in COMEX gold and silver contracts in the week to June 12, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. * Australia's South32 Ltd has bid $1.3 billion to take full control of Arizona Mining , offering a hefty premium for the Toronto-listed firm which is developing zinc, lead, manganese and silver assets. (Reporting by Karen Rodrigues in Bengaluru Editing by Joseph Radford)
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