(Reuters) – Gold prices edged higher on Wednesday, holding near the three-month high it touched in the previous session, as the dollar weakened on rising prospects of a rate cut by the U.S. Federal Reserve.

Spot gold was up 0.2% at $1,326.93 per ounce as of 0553 GMT, after clocking its highest level since Feb. 27 at $1,328.98 on Tuesday.

U.S. gold futures were also 0.2% higher at $1331.70 an ounce.

“After the announcement from Trump on tariffs on Mexico, there doesn’t seem to be an end (to trade woes). Markets are starting to come to grip with how these (trade conflicts) are going to slow down the global economy and not just the U.S. economy,” said David Song, analyst with DailyFx.

Fed Chair Jerome Powell said on Tuesday the central bank would act “as appropriate” in the face of trade war risks, leaving the door open for a possible rate cut.

Early in the week, St. Louis Fed President James Bullard said that a rate cut “may be warranted soon”.

“The focus will be on whether we will see global community of central bankers step in again and keep up the equity rally going … But until then this flight to safety (assets) will continue,” Song added.

Economic data released shortly after Powell’s statement on Tuesday also stoked expectations for a rate cut, as new orders for U.S.-made goods fell in April and shipments dropped by the most in two years.

Lower interest rates would support bullion as they reduce the opportunity cost of holding the non-yielding metal.

Meanwhile, the dollar hovered near the seven week-low it touched on Tuesday, making gold cheaper for holders of other currencies.

Gold prices have gained more than $50 since Trump’s tariff threat on Mexico, with investors selling riskier assets and seeking refuge in safe-haven bullion.

The jump in gold prices also saw a 2.2% rise in the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund on Monday. It was SPDR’s biggest one-day percentage gain since July 2016.

“We would lean to the long side in gold for the moment, as there simply are too many balls in the air that may not stay up for long and could send gold even higher from here if they tumble,” INTL FCStone analyst Edward Meir said in a note.

Among other precious metals, silver eased 0.1% to $14.81 per ounce after touching a near one-month high of $14.85 in the previous session.

Platinum rose 0.8% to $822.36 per ounce, while palladium fell 0.4% to $1,341.30 per ounce.