PRECIOUS-Gold set for 1st monthly gain in 4 on Trump tariff threat, Fed cut hopes

* Spot gold has risen 0.9% so far this month

* Platinum heading for biggest monthly loss since Nov. 2015

* Silver on track for fourth straight monthly loss (Updates prices)

May 31 (Reuters) - Gold prices rose on Friday, heading towards their first monthly gain since January on increased safe-haven demand, after U.S. President Donald Trump vowed to levy tariffs on all imports from Mexico, ratcheting up concerns of a global economic slowdown.

The new threat of tariffs on Mexico, coupled with a string of soggy economic data from the United States this month and the long-drawn Sino-U.S. trade war, also translated into increased bets that the U.S. Federal Reserve could cut interest rates this year.

Spot gold was up 0.5% at $1,294.72 per ounce at 0711 GMT. It has risen about 0.9% so far this month.

The metal is also on track for a second consecutive weekly gain, up about 0.8% over the week.

U.S. gold futures rose 0.6% to $1,294.70 an ounce.

An infuriated Trump on Thursday vowed to impose a tariff on all goods coming from Mexico starting at 5% and ratcheting higher until the flow of illegal immigrants into the United States ceases.

Asian shares and sovereign bonds sank on the news as investors feared the move risked tipping the United States, and maybe the whole world, into recession.

“Donald Trump’s (threat) about U.S. tariffs on Mexico, sparked some fears in the market. And if the whole U.S. and China negotiation is any example this can drag much longer,” said David Song, an analyst at DailyFX.

“With this kind of push from the Trump administration we will see whether or not the Fed will continue to have that flexibility to retain its wait and see approach,” Song added.

Lower interest rates would support gold since it reduces the opportunity cost of holding the non-yielding asset.

Overnight, data showed that U.S. inflation was much weaker than initially thought in the first quarter amid a sharp slowdown in domestic demand, which could cast doubts on the Fed’s view that the benign price pressures were largely because of temporary factors.

However, “over the near term, a strong dollar will weigh down on commodities in general,” said Heng Koon How, head of markets strategy, United Overseas Bank.

“But our long term view is that gold will recover to $1,450 an ounce by middle of 2020 as safe haven in-flows and portfolio diversification needs increase to gold’s advantage.”

The dollar index was on track for a 0.5% gain this week supported by weakness in peers such as the euro and sterling, and the U.S. currency’s own status as a safe-haven in times of market and economic troubles.

Elsewhere, silver edged 0.1% higher to $14.54 per ounce but was heading for its fourth straight monthly loss.

Platinum was steady at $791.36 per ounce, having fallen to its lowest level since Feb. 15 at $784.42 in the previous session. The metal was on track for its biggest monthly loss since Nov. 2015, down 10.7% so far.

Palladium fell 0.3% to $1,363.26 per ounce, not far away from a peak since May 1 at $1,380.75 it touched in the previous session. (Reporting by Arijit Bose in Bengaluru; Editing by Joseph Radford and Rashmi Aich)