Gold steady amid U.S. rate hike prospects

By Karen Rodrigues

BENGALURU (Reuters) - Gold prices were little changed on Monday as expectations of a U.S. rate hike this month offset support from trade war worries.

Spot gold was nearly unchanged at $1,292.96 per ounce by 0340 GMT, after hitting its lowest since May 23 at $1,289.12 in the previous session.

U.S. gold futures for August delivery were down 0.2 percent at $1,297.20 per ounce.

Better-than-expected U.S. economic data released on Friday is weighing on prices, said ANZ analyst Daniel Hynes.

"Some of the risks on the geo-political front are easing slightly... It is going to be very difficult for gold to really push higher from here," Hynes said.

U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, underpinning expectations that the Federal Reserve will raise interest rates this month.

Higher interest rates discourage the buying of non-interest-paying bullion, which is priced in dollars.

"It's very common for gold to trade defensive ahead of a Fed rate hike, but with geopolitical risk premium deflating, these narratives should provide a challenge to gold's ambitions this week," said Stephen Innes, APAC trading head at OANDA.

Recent strong U.S. data overshadowed concerns about escalating trade tensions between the United States and its allies.

Finance leaders of the closest U.S. allies vented anger over the Trump administration's metal import tariffs on Saturday, ending a three-day meeting with a stern rebuke of Washington and setting up a heated fight at a G7 summit next week in Quebec.

Meanwhile, speculators raised their net long position in COMEX gold contracts to the strongest since late April in the week to May 29, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Dealers raised their net long position in COMEX gold by 33,708 contracts to 61,235, the data showed.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.25 percent to 836.42 tonnes on Friday.

In other precious metals, spot silver was 0.1 percent higher at $16.37 an ounce, while platinum was nearly unchanged at $899.50 an ounce.

Palladium rose 0.5 percent to $1,004 per ounce. Earlier in the session, it touched its highest in over three weeks at $1,007.50.

(Reporting by Karen Rodrigues in Bengaluru; editing by Richard Pullin and Subhranshu Sahu)