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PRECIOUS-Gold hits 1-week high as trade jitters dampen risk appetite

Sethuraman N R

* Asian stocks track Wall Street slide

* Indian gold buying seen supporting physical demand (Adds quote, detail and updates prices)

May 8 (Reuters) - Gold prices rose to their highest in more than a week on Wednesday as renewed worries over U.S.-China trade dispute and its potential impact on global growth dented risk sentiment, stoking investors towards safe-haven assets.

Spot gold was up 0.1 percent at $1,285.56 per ounce, as of 0305 GMT, after hitting their highest since April 26 at $1,287.08

U.S. gold futures edged 0.1 percent higher to $1,287 an ounce.

"Gold is being supported by risk-aversion buying at the moment. But, there is no change in the underlying momentum in overall sentiment, which seems to be soft," said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

MSCI's broadest index of Asia-Pacific shares outside Japan to its lowest level since late March, tracking Wall Street's slide.

U.S. President Donald Trump tweeted on Sunday he would raise tariffs on $200 billion worth of Chinese goods, while Washington accused Beijing of backtracking from commitments made during trade negotiations.

Chinese Vice Premier Liu He will visit the United States on Thursday for trade talks and additional tariffs are set to take effect on Friday if a trade agreement is not reached by then.

"Investments are moving into high quality government bonds and Japanese yen rather than gold. Gold should remain supported at least if there is no progress in trade talks. But is probably going to test $1,260 levels if the talks go well," Halley said.

While gold has managed to gain as demand for safe-haven assets have risen, prices have not been able to significantly move up despite the given backdrop in global markets.

"Downside risks to growth from higher tariffs and the potential for equity weakness and lower yields should support gold. But potential upside to the dollar would likely act as a headwind to gold," UBS said in a research note.

While gold staying above $1,280 is encouraging, the extent of the dovish shift in U.S. Federal Reserve's expectations has made gold vulnerable to improvement in the data during a time when physical markets tend to be mostly quieter due to a weak Chinese demand, UBS said.

Gold came under pressure last week after the Fed dashed hopes of an interest rate cut this year.

Meanwhile, holdings of SPDR Gold, the world's largest gold-backed exchange-traded fund, saw a slight uptick on Tuesday after a dismal run. Holdings are still at their lowest level since October 2018.

Also, Indians were expected to buy at least 10 percent more gold during the annual Hindu and Jain holy festival of Akshaya Tritiya than a year ago, supporting physical demand in Asia.

Silver was steady at $14.91 an ounce, while platinum gained 0.5 percent to $872.40.

Palladium rose 0.6 percent to $1,335.79 an ounce. (Reporting by Nallur Sethuraman in Bengaluru, Editing by Sherry Jacob-Phillips)