June 15, 2018 / 5:05 AM / 7 days ago

PRECIOUS-Gold slips on stronger dollar; U.S.-China trade war fears loom

    * Spot gold off 1-month highs 
    * Gold heads for second straight weekly gain
    * Silver up about 2.3 pct for the week
    * Palladium headed for first weekly decline in four

 (Recasts with updated prices)
    By Karen Rodrigues
    BENGALURU, June 15 (Reuters) - Gold prices slipped on Friday
from a one-month high hit in the previous session as investors
booked profits and the dollar strengthened, while worries over
U.S.-China trade dispute capped losses.
    Spot gold        fell 0.3 percent to $1,298.25 per ounce at
0704 GMT, after reaching its highest since May 15 at $1,309.30
an ounce on Thursday. 
    U.S. gold futures         for August delivery were down 0.5
percent at $1,301.50 per ounce.
    The dollar index       , which measures the greenback
against a basket of six major currencies, rose 0.3 percent to
95.079. It hit its highest in over seven months earlier in the
session.       
    "We saw a little bit of selling early this morning, a little
bit of profit-taking ... Gold was unable to hold above this
(previous days highs), so again we are sitting back in sort of
that $1,290-$1,305 range," said MKS SA senior precious metals
dealer Alex Thorndike.
    Investors are keeping a close tab on trade tensions between
the world's top two economies and if the United States imposes
tariffs on Chinese goods, gold could test the overnight highs of
$1,309-$1,310 an ounce, said Thorndike.
    U.S. President Trump has made up his mind to impose "pretty
significant" tariffs on Chinese goods, an administration
official said on Thursday, as Beijing warned that it was ready
to respond if Washington chose to ratchet up trade tensions.
            
    With the looming U.S.-China trade deadline, investors
continue to view gold as an excellent hedge against a possible
equity market tumult if trade war escalates beyond the status
quo, said Stephen Innes, APAC trading head at OANDA.
    "An escalation of trade war could prove extremely disruptive
for financial markets, so gold should hold its bid as we enter
another phase of geopolitical uncertainty," he said.
    Asian shares wobbled as investors braced for U.S. tariffs
against China, while the euro hit a fresh two-week low after a
cautious European Central Bank indicated it would not raise
interest rates for some time.                         
    Meanwhile, the Bank of Japan maintained its ultra-loose
monetary policy and downgraded its view on inflation.
            
    In other precious metals, silver        fell 0.1 percent to
$17.12 an ounce, a day after it hit its highest since April 19
at $17.32 an ounce. The metal has risen about 2.2 percent this
week.
    Platinum        was 0.3 percent higher at $902.30 an ounce.
    Palladium        was down 0.3 percent at $1,004.72 and was
on course for its first weekly decline in four.

 (Reporting by Karen Rodrigues and Swati Verma in Bengaluru;
Editing by Subhranshu Sahu and Vyas Mohan)
  
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