* Palladium hits fresh five-month peak
* Platinum hits 6-week top
* Sept. Fed rate hike already priced in - analysts
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Updates throughout)
By Zandi Shabalala
LONDON, Sept 21 (Reuters) - Gold prices fell more than 1 percent on Friday as the dollar firmed on persistent concerns about an escalating trade war between the United States and China in a week where both sides slapped new tariffs on each other’s goods.
A decline in the euro and the British pound against the dollar also weighed on prices as a stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
China hopes the United States will show sincerity and take steps to correct its behaviour, its commerce ministry said on Thursday, amid new levies in a long-standing tit-for-tat dispute.
Spot gold was 0.6 percent lower at $1,199.79 per ounce by 1438 GMT, having touched its lowest since Sept 11 at $1,191.51, reversing recent gains that had lifted the metal to one-week highs.
U.S. gold futures were down 0.6 percent at $1,204.40 per ounce.
“A big selloff in the pound and euro sent the dollar sharply higher. And gold, being dollar-denominated, fell as a result of that,” said FOREX.com analyst Fawad Razaqzada.
The euro and the pound were punished after British Prime Minister Theresa May said the European Union must come up with an alternative to her Brexit proposals, saying talks had reached an impasse after the bloc’s leaders had rejected her plans without explaining why.
The dollar’s status as the chief reserve currency makes it the prime beneficiary of concern over trade conflicts, with the United States seen as having less to lose from the dispute.
Investors are waiting for next week’s Federal Reserve meeting, where the U.S. central bank is widely expected to raise benchmark interest rates.
Investment bank Goldman Sachs slashed its three, six and twelve-month gold price forecasts but said there were signs that fundamentals were starting to change, with a recent weakening of the dollar and a rebound in Chinese and Indian gold purchases.
Among other precious metals, spot silver rose 0.6 percent to $14.35 an ounce, after rising to two-week highs of $14.43.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, is at a record high of 83.
Palladium touched its highest since April 19 at $1,056.72 per ounce and was down 0.2 percent at $1,047.75 an ounce.
Platinum fell 0.4 percent to $828.40 after hitting its highest since Aug. 9 at $838.40. (Additional reporting by Nallur Sethuraman in Bengaluru; editing by Louise Heavens and Kirsten Donovan)