PRECIOUS-Gold prices climb on softer dollar, Trump's fresh tariff threat

June 2 (Reuters) - Gold prices climbed on Monday as U.S. President Donald Trump threatened to double tariffs on imported steel and aluminum, while a weaker dollar also supported greenback-priced bullion.

FUNDAMENTALS

Spot gold XAU= was up 0.6% at $3,309.89 an ounce, as of 0056 GMT. U.S. gold futures GCcv1 also climbed 0.6% to $3,333.30.

The U.S. dollar index .DXY edged 0.1% lower, making bullion less expensive for overseas buyers.

Trump said on Friday that he plans to raise tariffs on imported steel and aluminum to 50% from 25%, prompting the European Commission to warn that Europe is prepared to retaliate.

Geopolitical tensions escalated as Ukraine and Russia sharply ramped up the war with one of the biggest drone battles of their conflict, a Russian highway bridge blown up over a passenger train and an ambitious attack on nuclear-capable bombers deep in Siberia.

Gold is considered as a safe-haven asset during geopolitical and economic uncertainty.

Meanwhile, Trump and Chinese President Xi Jinping are expected to speak soon to iron out trade issues including a dispute over critical minerals, according to Treasury Secretary Scott Bessent on Sunday.

On Friday, the U.S. Personal Consumption Expenditures Price index saw a year-on-year increase of 2.1% in April, versus a 2.2% forecast.

Fed Governor Christopher Waller said that interest rate cuts remain possible later this year even as the Trump administration's tariff regime is likely to push up price pressures temporarily.

Elsewhere, spot silver XAG= rose 0.2% to $33.04 an ounce, platinum XPT= was down 0.2% at $1,054.28 and palladium XPD= was steady at $970.79.