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PRECIOUS-Gold gains as renewed global trade worries boost safe haven sentiment

Harshith Aranya and Eileen Soreng

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* SPDR Gold holdings fell 0.22% on Tuesday

* Gold hits $1,435.99/oz, a peak since June 25

* Dollar index nudged off 2-week highs (Adds comments, details, updates prices)

July 3 (Reuters) - Gold prices climbed over 1% on Wednesday, driven by strong safe haven sentiment as hopes of a quick end to the U.S.-China trade row faded and a new trade front in Europe deepened concerns over tepid economic growth.

Spot gold was up 0.7% at $1,427.64 per ounce at 0438 GMT, after earlier touching a one-week high of $1,435.99.

U.S. gold futures were up 1.6% to $1,430.80 an ounce.

Extended weakness in global manufacturing data and U.S. trade protectionism looked poised to support bullion's appeal as investors avoided riskier assets, said Benjamin Lu, an analyst with Phillip Futures.

Just days after reaching a truce on China trade, the U.S. Trade Representative's office turned to Europe on Monday in the long-running dispute over aircraft subsidies, adding extra products to a list of EU goods that may be hit with tariffs.

The market also grew wary of the chances of a resolution to the year-long U.S.-China trade war after U.S. President Donald Trump's comments that any deal would have to be tilted in favor of the United States.

The dollar struggled as the fading hopes for any near-term Sino-U.S. trade deal revived safe-haven demand and drove U.S. bond yields to their lowest levels since late 2016. Asian shares also fell amid trade concerns and global growth worries.

"We are seeing very strong sentiment towards gold as the markets have priced in for three rate cuts in the second half of 2019, with one poised to happen at the next FOMC (U.S. Federal Open Market Committee) meeting," Lu said.

Investors will now focus on the release of U.S. economic data including non-farm payrolls on Friday, to better assess whether the Federal Reserve will cut interest rates later this month.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

"Technically gold remains positive and I recommend to go long on dips," said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers, adding there is a strong resistance around $1,435-$1,440 zone, while $1,410-$1,400 is a very good support for near term.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 798.44 tonnes on Tuesday.

Silver was flat at $15.31 per ounce.

Platinum fell 0.2% to $826.15 per ounce, while palladium rose 0.1% to $1,559.45 per ounce, having touched an over three-month peak earlier in the session. (Reporting by Eileen Soreng and Harshith Aranya in Bengaluru; editing by Richard Pullin)