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* SPDR Gold holdings rise 0.5% on Wednesday
* Platinum touches over 3-month low
* Dollar scales one-week peak (Updates prices)
May 30 (Reuters) - Gold prices inched up on Thursday, having hit a one-week low earlier in the session as investors opted for dollars and U.S. government bonds as a hedge against trade tensions between the United States and China.
Spot gold was up 0.2% at $1,281.58 per ounce by 1307 GMT, having fallen to its lowest level since May 23 at $1,274.44 earlier in the session. U.S. gold futures edged 0.1% lower to $1,285.70 an ounce.
"A strong U.S. dollar is weighing on the gold prices. The dollar has been strong lately; it seems like investors prefer to hold U.S. debts and other low risk serving bonds as opposed to gold," SP Angel analyst Sergey Raevskiy said.
"However, gold is still very supported around these prices. You would expect gold to be higher in this environment, but for now, it looks like the investors' focus is elsewhere."
Gold turned slightly positive after data showed U.S. first-quarter gross domestic product (GDP) increased at a 3.1% annualized rate, slightly down from the 3.2% pace estimated last month.
The dollar index earlier climbed to a one-week peak and hovered within striking distance of a two-year high of 98.371 hit a week ago, as Sino-U.S. trade tensions prompted investors to seek refuge in the greenback and government bonds.
The dollar has been used as the preferred hedge against trade tensions, repeating a trend seen last year and making gold more expensive for holders of other currencies.
The dollar is also benefiting from increased demand for bonds since the currency is needed to buy bonds, eroding bullion's appeal.
Ramping up the rhetoric against the United States, a senior Chinese diplomat on Thursday said deliberately provoking trade disputes is "naked economic terrorism, economic chauvinism, economic bullying."
China's Communist Party newspaper had warned that Beijing was ready to use rare earths to strike back at the United States.
The latest exchanges between Beijing and Washington signalled the heightened risk of a prolonged trade war and have tempered investors' enthusiasm towards riskier assets.
"With bond yields so low and weakening equity markets, gold could find support. As (long) as the price remains above $1,265-$1,270, gold will rally back to $1,306 and $1,316 levels," said Nicholas Frappell, global general manager at ABC Bullion.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.5% to 740.86 tonnes on Wednesday.
Despite Wednesday's rise, SPDR gold holdings have fallen more than 6% so far this year.
Among other precious metals, silver rose 0.3% to $14.46 per ounce. The metal had dropped to $14.25 on Tuesday, its lowest level since early December.
Platinum was steady at $791.16 per ounce, after earlier falling to its lowest since Feb. 15 at $785. Palladium slipped 0.1% to $1,347.85 per ounce. (Reporting by Brijesh Patel and Harshith Aranya in Bengaluru, editing by Deepa Babington)