By Zandi Shabalala
LONDON (Reuters) - Gold steadied off last week's six-month low on Monday as concerns over a global trade war ratcheted higher after a report said the United States plans to bar Chinese companies from investing in its technology firms.
The U.S. Treasury Department is crafting rules that would block firms with at least 25 percent Chinese ownership from buying U.S. companies involved in "industrially significant technology", the Wall Street Journal reported on Sunday.
This was the latest escalation in a global trade war that has seen China and the United States threaten billions of dollars worth of tariffs on each other's imports.
The standoff between the world's two largest economies threatens to limit global economic growth, analysts said, but could benefit gold which can shine in time of economic and political turmoil.
Danske Bank analyst Jens Pedersen said the risk-off mood was being seen in the commodities space on Monday. "Today on a relative basis, gold is performing better than commodities and equities," he said.
Spot gold was steady at $1,268.06 an ounce as of 1412 GMT, close to a six-month low touched on Thursday of $1,260.84.
U.S. gold futures for August delivery were flat at $1,269.70 per ounce.
Global shares fell on escalating trade tensions and the dollar index, which measures the U.S. unit against a basket of six major currencies, turned softer, having hit its highest since July 2017 at 95.529 on Thursday.
"The fundamental dynamics suggest gold will remain under pressure until there is a discernible reversal in dollar sentiment," said Kitco Metals Global Trading Director Peter Hug.
"We are seeing some support lining up at the $1,265 level, with upward momentum capped at the $1,278 area."
Last week U.S. Federal Reserve Chairman Jerome Powell said the Fed should continue with a gradual pace of interest rate hikes to balance its employment and inflation goals.
Higher U.S. interest rates make gold a less attractive investment since it does not bear interest.
Speculators trimmed their net long position, or bets on higher prices, in COMEX gold to the weakest in 2-1/2 years in the week to June 19, data from the U.S. Commodity Futures Trading Commission showed on Friday.
In other precious metals, silver fell 0.7 percent to $16.32 an ounce.
Platinum was 1.2 percent lower at $863 an ounce. It touched $851.74, the weakest since February 2016, in the previous session.
Palladium was down 1.2 percent at $945.47 an ounce. The metal slipped to a seven-week low of $947.15 an ounce on Friday.
(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Jan Harvey)
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