PRECIOUS-Gold gains as U.S.-China trade woes subdue risk appetite

Reuters

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    * U.S. consumer price index rises 0.1% in May
    * SPDR Gold holdings down 0.03% to 756.18 tonnes Tuesday
    * GRAPHIC - 2019 asset returns: http://tmsnrt.rs/2jvdmXl

 (Adds U.S. data, quote, updates prices)
    By Eileen Soreng
    June 12 (Reuters) - Gold prices gained on Wednesday after
hitting a one-week low in  the previous session, as fears of
escalating U.S.-China trade tensions curbed risk appetite and
increased the appeal of safe-haven bullion.
    Spot gold  XAU=  was up 0.6% at $1,333.93 per ounce at 1302
GMT, its biggest one-day percentage gain since June 3, after
falling as low as $1,319.35 on Tuesday. U.S. gold futures  GCv1 
were 0.5% higher at $1,337.5 an ounce.
    "There seems to be some risk-off sentiment in the market...
We've now seen prices move up on the back of concerns around
(U.S.-China) trade and we think that will continue to underpin a
strong performance in gold," said Capital Economics analyst Ross
Strachan.
    World share markets snapped a seven-day winning streak on
Wednesday after the United States toughened its stance on trade
with China.  MKTS/GLOB 
    U.S. President Donald Trump defended the use of tariffs as
part of his trade strategy, while China vowed a tough response
if Washington insists on escalating trade conflict amid ongoing
negotiations.  urn:newsml:reuters.com:*:nL4N23I2AD
    Trump also emphasised he was holding up a trade deal with
China and had no interest in moving ahead unless Beijing agrees
again to four or five "major points", which he did not specify.
 urn:newsml:reuters.com:*:nL2N23I153
    Trump is expected to meet Chinese President Xi Jinping at
the G20 summit in Japan later this month.
    Meanwhile, data from the U.S. Labor Department showed
consumer prices barely rose in May, pointing to moderate
inflation that together with a slowing economy could increase
pressure on the Federal Reserve to cut interest rates this year.
 urn:newsml:reuters.com:*:nL2N23I1A9
    Fed policymakers will meet on June 18-19. A Fed watch tool
by CME assigns a 18% probability of a U.S. rate cut next week
and a 68% probability of a cut in July.
    The dollar hovered near the 2-1/2 month low touched last
week on growing expectations of a rate cut next week and trade
concerns, supporting gold prices further.  USD/ 
    "The gold bulls have the overall near-term technical
advantage and regained momentum today," Jim Wyckoff, senior
analyst at Kitco said in a note, adding the next upside price
target would be a close in August futures above June's $1,352.70
high.
    Holdings of SPDR Gold Trust  GLD , the world's largest
gold-backed exchange-traded fund, fell marginally to 756.18
tonnes on Tuesday from 756.42 tonnes on Monday.  GOL/ETF 
    Among other metals, silver  XAG=  climbed 0.7% to $14.80 per
ounce, while platinum  XPT=  was little changed at $812.65 per
ounce.
    Palladium  XPD=  was up 0.1% at $1,395.61 per ounce, after
touching a more than six-week high of $1,400.50 in the previous
session. 

 (Reporting by Eileen Soreng and Arijit Bose in Bengaluru
Editing by Emelia Sithole-Matarise/Mark Heinrich/ Kirsten
Donovan)
 ((eileen.soreng@thomsonreuters.com; Within U.S. +1 651 848
5832, Outside U.S. +91 80 6749 6131; Reuters Messaging:
eileen.soreng.thomsonreuters.com@reuters.net))

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