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PRECIOUS-Gold prices gain on softer dollar due to trade war fears

* Spot gold may retest support at $1,316/oz - technicals

* Trump faces backlash on tariff imposition

(Adds comments, updates prices) March 6 (Reuters) - Gold prices edged up on Tuesday on a softer dollar and as investors covered short positions amid jitters about a global trade war due to U.S. President Donald Trump's plan to impose steel and aluminum tariffs.

Spot gold was trading up 0.2 percent at $1,322.55 per ounce at 0341 GMT, while U.S. gold futures for April

delivery rose 0.3 percent to $1,323.30 per ounce.

The dollar index , which measures the greenback

against a basket of major currencies, eased 0.2 percent. The dollar tumbled to 16-month lows against the safe-haven yen late last week as concerns about a trade war gripped markets after Trump announced his plan for steel and aluminium tariffs. "A lot of gold's movement of late has been driven by Trump's actions. Market watchers are closely watching what he is going to say and do as no one knows what he is actually going to do," said OCBC analyst Barnabas Gan. "The threat of the steel and aluminum tariff materialising is still a possibility and that's why gold prices will be trading around these levels." Trump refused to back down from his decision to levy tariffs on imported steel and aluminum tariffs despite a backlash from trade allies. "In the near term, given the unpredictable nature of current market sentiment, investors will continue to buy gold on dips to hedge the growing tail risk from Trump's controversial policies," said Stephen Innes, APAC trading head at OANDA. Worries have eased this week, however, as pressure to back off from plans to implement new tariffs grew and as market participants came to view Trump's proposed tariffs more as a negotiating tactic than a hard policy proposal. Trump was expected to finalise the planned tariffs later in the week, although some observers familiar with the process said it could occur next week. Asian shares regained some ground on Tuesday as investor worries about an imminent trade war eased. Spot gold may retest a support at $1,316 per ounce, as it may have completed a bounce from the March 1 low of $1,302.61, according to Reuters technical analyst Wang Tao.

In other precious metals, silver was flat at $16.43

per ounce.

Platinum rose 0.3 percent to $963.50 per ounce, while palladium gained 0.4 percent to $986.47 per ounce.

(Reporting by Eileen Soreng in Bengaluru; editing by Richard Pullin)