Gold prices were mostly steady on Thursday, close to a one-week low hit in the previous session, as the dollar held firm amid an intensifying trade war between the United States and China.

Spot gold was steady at $1,243.10 an ounce at 0328 GMT. The yellow metal slipped 1 percent and hit an over one-week low at $1,240.89 on Wednesday.

U.S. gold futures for August delivery were 0.1 percent lower at $1,243.60 an ounce.

"The U.S. dollar firmed up across the board and I think that is the main reason," a Sydney-based trader said.

"With the softer U.S. equity markets and the ongoing trade war between the U.S. and China you would think it would provide some support for gold but that has not been the case."

The dollar steadied near a six-month high against the Japanese yen and held firm against its major peers on Thursday after the latest U.S. economic data reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year. [USD]

"The further escalation of trade war is mutually destructive given the higher U.S. consumer prices as a result of import tariffs, which in turn could fuel risk of a faster-than-expected Fed rate hike in the foreseeable horizon," OCBC said in a note.

A stronger dollar and higher interest rates reduce demand for non-interest bearing gold as the metal becomes more expensive for holders of other currencies.

Stocks and commodities recovered slightly on Thursday as markets tried to consolidate from the previous session's steep losses when fears of an escalation in the U.S.-China trade war jolted investor sentiment. [MKTS/GLOB]

China accused the United States of bullying and warned it would hit back after the Trump administration raised the stakes in their trade dispute, threatening 10 percent tariffs on $200 billion of Chinese goods in a move that rattled global markets.

Spot gold may break a support at $1,237 per ounce and fall more towards the next support at $1,226, Reuters technicals analyst Wang Tao said. [TECH/C]

In other precious metals, silver was 0.2 percent higher at $15.78 an ounce. It fell to its lowest since mid-December at $15.72 an ounce, earlier in the session.

Platinum was up 0.1 percent at $825.40 an ounce and palladium was 0.1 percent higher at $938.50 per ounce.

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