Bengaluru — Gold prices gained on Wednesday after hitting a one-week low in the previous session, as fears of escalating US-China trade tensions curbed risk appetite and increased the appeal of safe-haven bullion.

Spot gold was up 0.6% at $1,334.80 an ounce as of 11.34am GMT, its biggest one-day percentage gain since June 3, after falling as low as $1,319.35 on Tuesday. US gold futures were 0.6% higher at $1,339.7 an ounce.

“There seems to be some risk-off sentiment in the market ... We’ve now seen prices move up on the back of concerns around [US-China] trade and we think that will continue to underpin a strong performance in gold,” said Capital Economics analyst Ross Strachan.

World share markets snapped a seven-day winning streak on Wednesday after the US toughened its stance on trade with China. US President Donald Trump defended the use of tariffs as part of his trade strategy, while China vowed a tough response if Washington insists on escalating trade conflict amid ongoing negotiations.

Trump also emphasised that he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees again to four or five “major points”, which he did not specify.

Trump is expected to meet Chinese President Xi Jinping at the G20 summit in Japan later this month.

Meanwhile, gold bulls are also optimistic about an interest rate cut by the US Federal Reserve. Fed policy makers will meet on June 18 and 19 against the backdrop of rising trade tensions, slowing US growth, and a sharp reduction in hiring last month that has led markets to price in at least two rate cuts by the end of 2019.

The dollar hovered near the two-and-a-half-month low touched last week on growing expectations of a rate cut next week, supporting gold prices further.

“Technical traders are likely to closely monitor how prices behave above the $1,324 support level this week. Should this prove to be reliable support, the next key level of interest for gold could be found around $1,347,” Lukman Otunuga, research analyst at FXTM, said in a note.

Also in focus is the May US consumer price data, due at 12.3pm GMT.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell marginally to 756.18 tonnes on Tuesday from 756.42 tonnes on Monday.

Among other metals, silver climbed 0.6% to $14.79 an ounce, while platinum was up 0.2% at $814.50 an ounce. Palladium was steady at $1,394.25 an ounce, after touching a more than six-week high of $1,400.50 in the previous session.