March 22, 2018 / 11:23 AM / a month ago

PRECIOUS-Spot gold dips, futures settle up ahead of options expiry

    * Trump initiates trade action against China
    * Dollar swoons early, then rebounds
    * Spot gold down, gold futures settle up

 (New throughout, updates prices, market activity and comments,
adds second byline and NEW YORK dateline)
    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, March 22 (Reuters) - Spot gold dipped on
Thursday as the U.S. dollar pared losses on safe-haven buying
from investors fearing a trade war between the United States and
China, but gold futures rose, with one trader citing arbitrage
trades.
    U.S. President Donald Trump initiated trade action against
China, saying the U.S. deficit with Beijing was "out of control"
at about $504 billion and there was a huge "intellectual
property theft situation."             
    Spot gold        dipped 0.3 percent at $1,328.21 per ounce
by 2:28 p.m. EDT (1828 GMT).
    U.S. gold futures         for April delivery settled up
$5.90, or 0.5 percent, at $1,327.40 per ounce. One trader said
investors were rolling from the expiring contract of April into
the new front month, which is June.
    "When you get close to a roll, you can see some dislocation.
There are some arbitrage players who try to profit from that,"
said Michael Matousek, head trader at U.S. Global Investors. "It
gets down to the liquidity sometimes. If you wait too late to
roll, you're kind of doing yourself an injustice."
    The U.S. dollar index bounced from a month low versus a
currency basket. A stronger greenback makes dollar-priced gold
costlier for holders of other currencies.                    
    "We have another rush to cash so you see crude, copper also
being sold as markets weaken all around," said George Gero,
managing director at RBC Wealth Management.
    Some market participants still expect a rebound in gold
prices.
    "I know gold is down a little bit right now, but I wouldn't
be surprised to see it reversed," said Chris Gaffney, president
of world markets at EverBank.
    Gold will likely trade within a tight range near term,
traders have said, citing conflicting signals between support
for bullion from geopolitical worries and pressure from strength
in the U.S. economy.
    Europe and U.S. equities fell as technology stocks stayed
under pressure.            
    "We expect the prospect of a trade war between the U.S. and
other economies to put a floor under gold prices in the short
term but ultimately we think that Fed tightening will prove too
strong a headwind," Capital Economics analyst Simona Gambarini
told the Reuters Global Metals Forum.
    Meanwhile, spot silver        dropped 0.7 percent at $16.41
per ounce, while platinum        fell 0.5 percent at $949.40,
earlier seeing a 1-week high of $963.60.
    Palladium        fell 0.8 percent at $982.45 per ounce,
earlier hitting a 1-1/2-week low at $967.

 (Additional reporting by Eileen Soreng in Bangaluru; editing by
Elaine Hardcastle and David Gregorio)
  
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