PRECIOUS-Safe-haven gold drifts higher on tariff turmoil, Fed cut hopes

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Trump's higher tariff rates hit goods from major US trading partners

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Traders see 93% chance of Fed rate cut in September

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Fed needs to respond to slowing US economy, says Kashkari

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US dollar drops to 1-1/2 week low earlier

(Updates for EMEA midday hours)

By Sherin Elizabeth Varghese

Aug 7 (Reuters) - Gold edged higher on Thursday as renewed trade tensions sparked by steep U.S. tariffs boosted safe-haven demand, while growing interest-rate cut bets added to the bullion's appeal.

Spot gold was up 0.3% at $3,375.99 per ounce as of 1028 GMT. U.S. gold futures gained 0.5% to $3,448.90.

U.S. President Donald Trump's latest wave of tariff hikes, ranging from 10% to 50% and targeting dozens of countries, took effect on Thursday, testing the limits of his aggressive trade strategy.

Trump also announced a 100% tariff on imported semiconductors, though exemptions would apply to firms that manufacture or commit to manufacturing in the U.S.

The dollar dropped to a 1-1/2-week low earlier, making gold less expensive for other currency holders.

"Uncertainty is back in focus, especially with the latest developments on the tariff front, which is reviving safe-haven demand. We are also seeing support from broader macro sentiment, particularly with a softer U.S. dollar and growing expectations of Fed rate cuts," said ANZ Commodity Strategist Soni Kumari.

"Tariffs remain a key catalyst, but the bigger trigger will be how the U.S. economy performs. If we see a significant slowdown in the second half, that could push gold toward our target of $3,500 by September."

The Federal Reserve may need to cut rates in the near term in response to a slowing U.S. economy, Minneapolis Fed President Neel Kashkari said. According to the CME FedWatch tool, markets are now pricing in a 93% chance of a 25-basis-point rate cut in September.

Gold, traditionally considered a safe-haven asset during political and economic uncertainties, tends to thrive in a low-interest-rate environment.

"We still see some upward pressure on gold prices extending out through the end of 2026," NAB analysts said in a note, forecasting average prices of $3,220/oz in 2025 and $3,475/oz in 2026.

Elsewhere, spot silver rose 1% to $38.24 per ounce, platinum was down 1.1% to $1,318.53 and palladium gained 1.4% to $1,148.39.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Harikrishnan Nair and Vijay Kishore)