June 14, 2018 / 4:16 AM / 9 days ago

PRECIOUS-Gold hits 2-week high on dollar weakness, trade worries

    * Silver climbs to near two-month peak
    * U.S.-China trade concerns support bullion
    * Fed sees 2 more rate hikes this year
    * ECB meeting due later in the day

 (Recasts with updated prices, details)
    By Karen Rodrigues
    BENGALURU, June 14 (Reuters) - Gold hit a two-week high on
Thursday, supported by a weaker dollar and trade worries between
Washington and Beijing, even as the U.S. Federal Reserve
forecast a slightly faster pace of interest rate hikes this
year.
    Spot gold        rose 0.3 percent to $1,302.50 per ounce at
0744 GMT. It earlier hit a high of $1,303.38 an ounce, its best
since May 31.
    U.S. gold futures         for August delivery rose 0.4
percent to $1,306 per ounce.
    Dollar is under pressure, so gold is doing well this
morning, a Hong Kong-based trader said.
    The dollar index       , which measures the greenback
against a basket of six major currencies, was down 0.4 percent
at 93.388.        
    "Reports that President Trump was preparing to put tariffs
on billions of dollars of Chinese goods as soon as Friday raised
concerns in the market that economic growth would be impacted.
This saw some safe-haven buying emerge," ANZ said in a note.
    U.S. President Donald Trump will meet with his top trade
advisers on Thursday to decide whether to activate threatened
tariffs on Chinese goods.             
    "Investor demand was also supported by a slightly weaker
U.S. dollar in the wake of the Fed decision to raise interest
rates," ANZ said.
    The U.S. Federal Reserve raised interest rates on Wednesday,
and signalled two additional hikes by the end of this year,
compared to one previously.             
    "It (rate hike) is all priced in and obviously there are a
lot of uncertainties looking past this which is supporting gold
prices in our view," said Richard Xu, a fund manager at HuaAn
Gold, China's biggest gold exchange-traded fund.
    "Its muted response to the Federal Reserve increase is
because a lot of safe haven demand is going to take place... The
trade war drama is not going to end anytime soon, it is probably
going to be exasperated over the next month or so."
    Meanwhile, China's central bank left borrowing costs for
interbank loans unchanged on Thursday, an unexpected decision
that shrugged off the U.S. Federal Reserve's increase in its
benchmark rate overnight.             
    The decision came as China reported "shockingly weak"
activity data for May.             
    Markets are now looking forward to policy announcements from
the European Central Bank (ECB) later in the day where the bank
will debate whether to end its huge asset purchases by year-end.
            
    In other precious metals, silver        climbed 0.6 percent
to $17.09 an ounce, having earlier hit $17.14 an ounce, its
highest since April 20.
    Platinum        was 0.5 percent higher at $903.20 an ounce,
while palladium        gained 0.2 percent to $1,010.85 per
ounce.

 (Reporting by Karen Rodrigues and Swati Verma in Bengaluru;
Editing by Sunil Nair and Vyas Mohan)
  
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