May 4, 2020 / 10:04 AM / a month ago

PRECIOUS-Gold gains as U.S.-China tensions dent risk appetite

 (Updates prices)
    * SPDR gold holdings rose 1.1% on Friday 
    * European shares and oil prices fall 
    * For an interactive graphic tracking the global spread,
open tmsnrt.rs/3aIRuz7
 in an external browser

    By Brijesh Patel
    May 4 (Reuters) - Gold prices rose on Monday as U.S.
President Donald Trump's threat to impose tariffs on China over
the coronavirus crisis overshadowed optimism about economies
easing lockdown measures,  driving investors away from riskier
assets.
    Spot gold        was up 0.2% at $1,701.63 an ounce by 1227
GMT. U.S. gold futures        rose 1% to $1,717.60.
    "We have a risk-off environment in financial markets today,"
said Julius Baer analyst Carsten Menke.
    "The tensions which are building related to the outbreak of
coronavirus are just another example of this ceremonial tussle
between the U.S. and China," he said, adding that the discord
could turn out to be positive for gold.
    European stock markets and oil prices fell as the spat
between top U.S. officials and China over the origin of the
coronavirus fuelled fears of a new trade war.      
    Gold prices jumped more than 1% on Friday, recovering from
its lowest in nearly two weeks after President Trump threatened
to impose tariffs on China as he considers ways to retaliate for
the spread of the coronavirus out of Wuhan, China.
    Adding to that, Secretary of State Mike Pompeo on Sunday
said there was "a significant amount of evidence" that the new
coronavirus emerged from a Chinese laboratory, though he did not
dispute U.S. intelligence agencies' conclusion that it was not
man-made.             
    "Overall, gold is clearly performing its safe haven asset
role in a market where volatility remains high and the next bear
movement for stocks could be just around the corner if the virus
comes back with a second wave," ActivTrades chief analyst Carlo
Alberto De Casa said in a note.
    More than 3.5 million people have been infected by the
coronavirus, and central banks and governments around the world
have announced massive fiscal and monetary measures to limit
economic damage caused by the outbreak.             
    Gold tends to benefit from widespread stimulus measures from
central banks because it is often seen as a hedge against
inflation and currency debasement.
    Indicative of sentiment, holdings in the world's largest
gold-backed exchange-traded fund, SPDR Gold Trust      , rose
1.1% to 1,067.90 tonnes on Friday.          
    Last week gold registered its worst week in more than a
month as many countries moved to restart their economies and
hopes of a treatment for COVID-19 lifted market sentiment.
    Meanwhile, safe-haven gains for the U.S. dollar limited
gold's advance on Monday, with the dollar index        up 0.3%
against its rivals.       
    Elsewhere, palladium        gained 0.3% to $1,905.03 an
ounce, platinum        rose 0.7% to $765.76 and silver       
was down 0.4% at $14.88.

 (Reporting by Brijesh Patel in Bengaluru; Editing by Kirsten
Donovan and David Goodman)
  
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