March 2, 2018 / 5:12 AM / 3 months ago

PRECIOUS-Gold inches up as dollar dips on Trump's tariff plan

    * Spot gold may bounce more into $1,325-$1,332/oz -
technicals
    * Spot gold heads for second straight weekly drop

 (Updates prices)
    By Eileen Soreng
    March 2 (Reuters) - Gold prices rose slightly on Friday as
the dollar eased on fears of an imminent trade war following
U.S. President Donald Trump's decision to impose steep tariffs
on imported steel and aluminium.
    Spot gold        had risen by 0.1 percent to $1,317.29 an
ounce by 0757 GMT, but was on track for a second straight weekly
drop after having declined 0.9 percent so far.
    Prices fell to the lowest since Jan. 2, at $1,302.61, in the
previous session under pressure from expectations of more 
interest rate hikes in the United States than expected this
year.
    U.S. gold futures         were up 1 percent at $1,318.5 per
ounce on Friday.
    "The U.S. imposed trade tariffs and those that come back our
way in the form of retaliation should be net negative for the
dollar and could conceivably provide gold with some support,"
INTL FCStone analyst Edward Meir said in a note.
    The dollar index       , which measures the greenback
against a basket of major currencies, was down 0.1 percent at
90.233. It shed 0.4 percent overnight, pulling back from a
six-week high of 90.932 touched early on Thursday, after Trump's
decision.                    
    The Trump administration said the tariffs would protect U.S.
industry, but the dollar and Wall Street shares slumped as the
plan sparked fears of a trade war and worries about its
potentially negative impact on the world's largest economy.
    Meanwhile, Federal Reserve Chairman Jerome Powell said on
Thursday there was no evidence the U.S. economy is overheating,
and labour markets may still have room to improve as the central
bank sticks with a gradual pace of rate hikes.             
    The precious metals market would continue looking out for
interest rates along with the dollar's movement, said Dick Poon,
general manager at Heraeus Metals Hong Kong Ltd.
    A stronger dollar and higher interest rates reduce demand
for non-interest bearing gold as the metal becomes more
expensive for holders of other currencies.
    "Weaker equity markets could also provide a shot in the arm
for the precious metal," said Meir.
    Stock markets in Asia on Friday extended a Wall Street rout
as the risk of global trade war spooked investors.            
    Spot gold is expected to bounce more into a range of
$1,325-$1,332 per ounce, following its failure to break a
support at $1,303, according to Reuters technical analyst Wang
Tao.         
    Holdings of SPDR Gold Trust       rose 0.35 percent to
833.98 tonnes on Thursday from 831.03 tonnes on Wednesday.
            
    In other precious metals, silver        was down 0.3 percent
at $16.41 an ounce after touching its lowest in over two months
at $16.16 in the previous session.
    Platinum        was 0.3 percent lower at $963.40 per ounce
after falling to its lowest since Jan. 4 at $950.50 on Thursday.
    Palladium        fell 0.5 percent to $984.30 after recording
its biggest one-day percentage fall of 5.1 percent since Jan.
25, 2017, in the previous session.

 (Reporting by Eileen Soreng in Bengaluru; editing by Richard
Pullin and Subhranshu Sahu)
  
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