PRECIOUS-Gold prices rebound on weaker US dollar and tariff concerns

Updates with U.S. mid-session trading

By Anmol Choubey

March 3 (Reuters) - Gold prices rose over 1% on Monday after a slump to a three-week low in the previous session, driven by a weaker dollar and safe-haven buying in response to concerns over U.S. President Donald Trump's tariff policies.

Spot gold XAU= gained 1.1% to $2,891.29 an ounce as of 11:54 a.m. ET (1654 GMT). U.S. gold futures GCcv1 rose 1.9% to $2,902.30.

"I think ultimately we are in a very bullish market and gold can get much higher than $3,000 ... with tariffs and possible retaliation I still think you're seeing central banks come in and buy," said Daniel Pavilonis, senior market strategist at RJO Futures.

The dollar index .DXY dropped by over 1%, moving away from a more than two-week high hit in the previous session, reflecting weakness that makes dollar-priced gold less expensive for buyers holding other currencies.

Trump is expected to decide on Monday what level of tariffs he will impose effective from early Tuesday, on imports from Canada and Mexico. He had vowed to impose 25% tariffs on the two countries' imports, but this was paused for a month which expires on Tuesday.

Last week, Trump threatened China with an additional 10% duty, also set to take effect on Tuesday, resulting in a cumulative 20% tariff.

Investors' focus is also shifting to the ADP employment report due on Wednesday and the U.S. non-farm payrolls report due on Friday for more clues on the Federal Reserve's monetary policy.

Expectations around the Fed, which has held interest rates steady since December, are now uncertain ahead of the data.

Despite being widely viewed as a hedge against geopolitical and economic uncertainty, non-yielding gold becomes less attractive to investors when interest rates rise.

Spot silver XAG= was up 1.9% at $31.75 an ounce, platinum XPT= gained 0.8% to $954.60 and palladium XPD= added 3.1% to $947.75.

"We see room for larger gains in silver as the gold rally consolidates and global industrial production signals a modest recovery," UBS analysts said in a note.